Negotiate payment terms

If you’re behind with your payments, get in touch with your creditor, explain your circumstances and negotiate an arrangement based on what you can afford to pay.

Most organisations will work with you as long as your offer is reasonable, you keep up with agreed payments, and you keep them informed.

How to negotiate payment terms


Work out what you can afford to pay

If you're struggling to pay back money you owe, the first thing to do is to work out what you can actually afford to pay by doing a simple budget. How to work out what you can afford to pay.

If you can afford to pay something
Start paying the amount you can afford and get in touch with your creditor straight away to put a repayment agreement in place.

If you can't afford to pay anything
Call us on 1800 007 007 straight away for advice.


Contact the organisation

  • Contact the organisation and ask for the team that helps customers in financial hardship Sometimes, this is called the ‘hardship department' or 'hardship team' or may have a name like 'customer assist'
  • They can talk you through options to help you with your debt, such as giving you extra time to pay or offering a payment plan based on what you can afford. These are often called 'hardship variations' (see below for examples)

Tips IconBe prepared

  • Before you contact the hardship department, make sure you're prepared with:
    • a brief description of what caused your financial hardship
    • a copy of your budget (see Step 1)
    • proof of your income, such as a Centrelink Income Statement or several recent payslips
    • evidence of why you’re in hardship (such as a copy of a medical certificate)
  • Keep a detailed record of all contact you have with your creditor and others in relation to your request, including date, time of the calls and what was said by you and the organisation’s representative

Tips for talking to the hardship department, from the Financial Rights Legal Centre (PDF 214kb) 
Template to write a letter to request a hardship variation (Word 233kb) 


If you agree to a plan, do your best to stick to it

If you agree to a plan, get it confirmed in writing, and then do your best to stick to the repayments.

  • Make the agreed payments on pay day
  • If you're on a Centrelink income, use the Centrepay system for utility or telco bills
  • If you're struggling to make the repayments, go back to Step 1. If something changes or you were perhaps a bit optimistic about your repayments, don't ignore it. Take action and renegotiate

If you can't agree, you can dispute it

If you can’t come to an agreement that you think is fair, you have a right to seek ‘external dispute resolution’ if it's available in your state or territory. This free and independent service gives you an opportunity to explain how, by working with your lender, you can get back on track with payments. Refer to Dispute Resolution (Step 2)


Speak to one of our financial counsellors

If your problem still hasn't been solved, or you're feeling overwhelmed, call us on 1800 007 007 to speak with one of our financial counsellors.

Options when you're negotiating

Temporarily stop payments

This is often called a moratorium, 'deferral' or 'repayment holiday'.

  • No repayments are made in the deferral period
  • It is a useful option for definite, short-term hardship; for example, a fixed period of time off work due to injury, an unexpected illness or temporary unemployment
  • Some creditors might stop fees and interest during a deferral period if you ask

Extend or vary your loan

Terms of the loan are renegotiated due to financial hardship.

The payments can be:

  • reduced temporarily then they return to normal at a later date (the arrears are added to the loan and the term of the loan extended)
  • reduced temporarily and then you start making higher repayments (the term of the loan remains the same)
  • permanently reduced and the term of the loan is extended (if the debt is reasonably small)

Make a lump sum payment

  • An offer is made to settle the debt for less than the amount owing
  • The offer is made in full and final settlement of the debt

Surrender your assets

If your situation has permanently changed and you're certain you won't be able to afford payments on your house, car or other asset, you can contact your creditor and arrange to surrender the asset to them. They'll then sell the asset and put the proceeds against your debt.

While creditors try to sell goods for a reasonable price, it's possible that:

  • Your goods will sell for less than their expected market value; and
  • You'll still be left owing money after the item has been sold; and
  • You'll need to make a repayment arrangement or otherwise settle the remaining debt.

Debt waiver

In certain circumstances, creditors may waive the debt. For example, if:

  • Your only assets are basic household goods and/or a low value car
  • You are a long-term recipient of Centrelink
  • You are unwell or other compassionate grounds apply

Debt waivers are often appropriate if you have one or two debts. If you have multiple debts, other options might be more appropriate.

Freezing interest and fees

Freezing fees and interest (at 0%) to make repayments smaller may make it easier for you to pay the debt.
Often part of other solutions such as deferrals and moratoriums (above) can be a useful option.

Know your rights
Negotiating with your creditor

Organisations like utility companies, telcos and credit providers have obligations to provide ‘reasonable’ assistance to customers in financial hardship.

  • Request-for-hardship-variation-Letter-template If your creditor doesn’t agree to what you consider a fair solution, you don’t have to accept their decision. You have a right to take your dispute to the relevant External Dispute Resolution Scheme. In the meantime, any action against you will be frozen
  • Always keep making payments you can afford while you're negotiating