What Is Financial Hardship and What Can You Do?
Published ยท Updated
Financial hardship in Australia is a conversation with a lender you already have. What you can ask for, how arrangements often work, and what to do if you get stuck.
Financial hardship, on a consumer credit contract in Australia, means your circumstances have changed and you cannot meet the repayments as they currently stand. The conversation is with the credit provider on that account. It is not a new product, and it is not a guarantee that the debt is cancelled. ASIC and AFCA both publish guidance for consumers on how these processes work.
What hardship usually looks like
Illness, reduced hours, a relationship breakdown, a jump in rent, a car that died in the same month as the insurance. The common thread is that the original schedule no longer fits. You do not have to wait until you are in default. Earlier is cleaner.
How hardship arrangements often work
- A temporary drop in repayments
- A pause for a defined period
- A due-date change to match your pay cycle
- A longer term so the monthly amount is lower
- Time to catch up arrears without immediate enforcement
None of that is automatic. Interest may still accrue during a pause. A longer term can reduce the monthly figure and increase total interest. Get the trade-offs in writing. Moneysmart explains the consumer side in ordinary language.
How to prepare before you speak to a lender
- What changed, in one or two sentences
- When it started, and whether it looks temporary or longer
- What you can pay from next payday (a real number)
- A simple list of other debts so you are not promising money twice
- The account number and recent statements
If you have already missed a payment, read What happens if you miss a loan repayment? so the letter in your inbox is less of a shock.
If the lender says no, or goes quiet
Complain to the lender first, in writing if you can. If that does not resolve it, many consumer credit disputes can go to AFCA. Free financial counselling through the National Debt Helpline remains available. A paid adviser should be able to sit next to those options, not talk you out of them.
Hardship sits before most consolidation talk. Combining debts while you cannot service the current ones often just moves the pressure into a new contract. See Debt consolidation in Australia.
Common questions
Will hardship wreck my credit file?
Arrangements and missed payments can show up in different ways depending on the product and reporting. Ask the lender how they will record the arrangement. Then look at how to read your credit report.
Does hardship apply to Buy Now Pay Later?
BNPL providers have their own processes, and the rules have been tightening. Treat each plan as a real debt, and contact the provider early. Stacking new BNPL while you are in hardship on another account usually makes the month worse.
Can Lumiro talk to a lender for me?
Where that kind of help is within the service, it sits under financial hardship support. We will not claim we can do more than the relevant authorisation allows.
Not sure where to start? Talk to our team about your situation. Talk to us
This article is general information only. It is not financial, credit, legal or personal advice. Your circumstances matter, and outcomes are not guaranteed. Free help is also available through the National Debt Helpline (1800 007 007) and Moneysmart.