What banks and lenders must do when you can't make repayments
Last updated
If you're struggling with credit card debt, personal loans, or other credit — you have a legal right to ask your lender for help. They must genuinely consider your application and respond within 21 days. Asking for hardship help does not hurt your credit score — but missing payments without an arrangement can lead to a default that stays on your credit report for 5 years.
This is general information, not financial or legal advice. For help with your specific situation, call the National Debt Helpline on 1800 007 007 (free, confidential).
You can apply for a hardship variation on any loan, credit card, car finance, or mortgage. Since June 2025, buy now pay later services like Afterpay and Zip are also covered. Call your lender's hardship team (not general customer service) and tell them you're experiencing financial hardship and would like to discuss your options.
Your lender must respond to your hardship notice within 21 days. If they need more information, they must request it within 21 days, then respond within 21 days of receiving it. NAB was fined $15.5 million in 2025 for failing to respond to 345 hardship customers — this law is enforced.
Your lender can't just rubber-stamp a rejection. They must genuinely assess your situation, consider what you can afford, and offer alternatives. Common options include: reduced repayments, repayment pause (3-6 months), interest rate freeze, fee waivers, or extending the loan term.
If you give your lender a hardship notice, they cannot START court enforcement until they have given you a written decision saying you have not agreed, and 14 days have passed since that notice. They can still send a default notice in the meantime, and can still take mortgaged goods if they reasonably believe you are disposing of them or urgent action is needed to protect them. The protection does not apply if you gave a hardship notice on materially the same basis in the previous four months. Ask them, in writing, to pause collection activity while they assess it.
When you enter a hardship arrangement, a note appears on your credit report — but it cannot be used to calculate your credit score, and it's removed 12 months after the arrangement ends. A default listing, on the other hand, stays for 5 years and seriously damages your ability to borrow. Asking for help early is one of the best ways to avoid a default.
Lenders should consider: extending the loan term, reducing or deferring repayments, pausing interest, waiving fees, or restructuring the debt. In severe cases, partial debt write-off may be offered. Fee waivers and reduced repayments are the most common forms of assistance.
If your lender refuses your hardship request or offers inadequate help, you can lodge a free complaint with the Australian Financial Complaints Authority. AFCA can order the lender to vary your contract, refund fees, reverse interest charges, and award compensation up to $631,500 for direct loss.
Select your state above to see local ombudsmen, grants, and contact numbers.
A financial counsellor can negotiate with companies on your behalf — for free.