Working out how to get out of debt in Australia starts with listing everything you owe and building a budget around your essential bills, such as housing, energy and water. Then ask your lenders about hardship help early, and talk to a free financial counsellor through the National Debt Helpline.
This guide starts with the free services to contact first and how hardship assistance works. It then walks through the practical steps, your rights with debt collectors, the formal options under bankruptcy law and when to get qualified advice.
Free help to contact first
Financial counsellors are free, confidential and independent. They don't lend money or sell anything, so their only job is to help you work out what to do next.
A financial counsellor can:
- explain the options that fit your situation
- help you make a plan for your bills and debts
- negotiate with your creditors on your behalf
Service | Who it helps and how to reach it |
|---|---|
National Debt Helpline | Free financial counselling for anyone in Australia. Call 1800 007 007 weekdays 9:30am to 4:30pm, or use live chat on its website weekdays 9am to 8pm |
Mob Strong Debt Help | Free debt help for Aboriginal and Torres Strait Islander peoples. Call 1800 808 488 weekdays 9:30am to 4:30pm |
Way Forward | Not-for-profit debt management plans for people in long-term financial hardship. Call 1300 045 502 weekdays 9am to 7pm |
Lifeline | Crisis and mental health support, not debt counselling. Call 13 11 14, 24 hours |
Beyond Blue | Mental health support if debt is affecting how you feel, not debt counselling. Call 1300 22 46 36, 24 hours |
Source: Moneysmart and the National Debt Helpline, October 2026.
In a life-threatening or time-critical emergency, call Triple Zero (000). Be wary of businesses that charge to fix your debts, and check ASIC's professional register before you deal with one, because financial counselling costs nothing.
Asking for hardship help
If you can't keep up with a loan or credit card, contact the lender's hardship team as early as you can. Lenders have to consider a request for hardship help, then assess whether help is available and what kind suits your situation.
The help on offer can include a payment plan or changed repayments. Moneysmart explains that an arrangement may be temporary, such as deferring a payment, or permanent, such as varying the loan.
Only agree to repayments you can actually afford, so the new arrangement doesn't fall behind too. Help isn't automatic, and what you're offered depends on the lender's assessment.
A hardship arrangement doesn't affect your credit score. Your credit report shows that an arrangement is in place, and that listing is deleted after 12 months.
If the lender refuses, it has to give you reasons. You can then make a complaint, first to the lender and then to the free external complaints service covered further down.
Energy, water, phone and council providers run their own hardship processes, which can differ from a lender's. Contact each provider's hardship team directly and ask what it offers.
How to get out of debt, step by step
Once you know where free help is, these steps give you a clear picture and a plan. A financial counsellor can work through them with you.
- List everything you owe: who it's to, the balance, the interest rate, the repayment, the due date and whether it's secured against something.
- Work out a budget that compares the money coming in with the money going out.
- Keep up your priority bills first, such as housing, energy and water.
- Contact the lenders you can't pay before you miss a payment, and ask about hardship help.
- Put any extra money towards one debt at a time, using a method you can stick with.
- Avoid taking on new debt to cover old debt, such as a payday loan or a higher credit limit.
- Build a small savings buffer when you can, so an unexpected bill doesn't add to the debt.
Which bills to pay first
The National Debt Helpline lists the highest priority debts as:
- rent or mortgage payments, so you have somewhere to live
- council rates or body corporate fees
- car payments for a car that is essential for work, children, getting essential goods or medical appointments
- energy and water
Your own priorities depend on your circumstances, such as whether you rent or own and whether you rely on a car. Debts with legal consequences can't be ignored either, so a financial counsellor can help you work out the right order for you.
Avalanche or snowball
The avalanche method puts extra money towards the debt with the highest fees and interest first. Moneysmart notes that it saves more on interest over time.
The snowball method clears the smallest balance first, which some people find easier to keep going with. Either way, the method that works is the one you can keep up while your priority bills stay paid.
Informal arrangements with creditors
Before any formal step, you can ask a creditor to agree to a new arrangement directly. Creditors may give you more time to pay, and a counsellor can make the request with you or for you.
A debt collector may also agree to smaller payments spread out further, accept part of the balance as a lump sum to settle the debt, or in limited cases waive it. Ask for any agreement in writing.
These are informal arrangements between you and each creditor. They are separate from the formal options under bankruptcy law covered below, which carry legal consequences.
Your rights with debt collectors
Collecting a debt is legal, and a collector can contact you, ask for payment and explain what happens if you don't pay. Harassing or bullying you isn't allowed.
Ordinary contact and its limits
Two regulators, the ACCC and ASIC, publish a debt collection guideline for collectors and creditors. It says phone contact should be limited to a maximum of 3 calls a week or 10 a month, weekdays 7:30am to 9pm and weekends 9am to 9pm, with no contact recommended on national public holidays.
These are guideline limits, not a fixed count set in law. The law itself bans a collector from using physical force, coercion, undue harassment, or misleading or deceptive conduct.
If you dispute the debt
You can dispute a debt if it isn't yours, or if you owe less than the collector claims. Tell the collector why you're disputing it, and if you're unsure, ask for a copy of the contract and a statement of the amount owed.
If contact becomes harassment
If a collector is harassing or intimidating you, put a request in writing for that behaviour to stop. This doesn't cancel the debt, and a collector can still contact you in a reasonable way about it.
If the behaviour continues, you can complain to the Australian Financial Complaints Authority (AFCA), which is free and independent. Moneysmart's advice for any threat of violence or physical force is to contact the police immediately.
If you receive court papers or a bankruptcy notice
Get free legal advice straight away if you're told you're being taken to court. A bankruptcy notice is a formal demand for payment with a short deadline, so read it carefully and get legal help promptly.
Formal debt options and their consequences
The Australian Financial Security Authority (AFSA) explains four formal options under bankruptcy law. Each one can have serious, lasting effects, so get free financial counselling or qualified legal advice before you take any formal step.
Option | What it means at a glance |
|---|---|
Debt agreement (Part IX) | A legally binding agreement between you and your creditors. Eligibility limits apply, it isn't a consolidation loan, and it can affect your ability to get credit and appears on a public register |
Personal insolvency agreement (Part X) | A legally binding agreement between you and your creditors. It can affect your employment and ability to get credit, and appears on a public register permanently |
Temporary debt protection | A 21-day period in which creditors can't take enforcement action to recover eligible unsecured debts. Secured creditors can still repossess, some debts aren't covered, and creditors can still contact you and start or continue legal action. Applying is an act of bankruptcy |
Bankruptcy | Normally lasts 3 years and 1 day. It doesn't release you from all debts, and your name appears permanently on the National Personal Insolvency Index |
Source: Australian Financial Security Authority, October 2026.
None of these options suits everyone, and this guide doesn't recommend one. The AFSA website explains each option in full, and a financial counsellor can talk through the consequences for your situation.
When to get qualified help
Some situations need a professional sooner rather than later. This table shows where to start.
Your situation | Where to start |
|---|---|
You can't cover rent, food or energy this week | The National Debt Helpline, by phone or live chat |
You can still pay but are falling behind | Your lender's hardship team, then a financial counsellor |
A collector is harassing or threatening you | Ask in writing for the behaviour to stop, then AFCA; the police if violence is threatened |
You've received court papers or a bankruptcy notice | Free legal advice straight away |
You're thinking about a formal option | A financial counsellor first, then AFSA's information |
Someone offers to fix your debts for a fee | Check ASIC's register; financial counselling is free |
In Western Australia, Legal Aid WA runs an Infoline on 1300 650 579, weekdays 9am to 4pm. Elsewhere, free legal advice is available from community legal centres and Legal Aid agencies.
Where debt consolidation fits
A debt consolidation loan rolls several debts into one. It's one option, not the default answer, because Moneysmart warns it can cost you more and put any asset the debt is secured against at risk.
From a broker's side, a new loan may not be the answer when:
- you're already missing repayments
- the new term is longer, so the total cost is higher even if the repayment drops
- hardship help could cover the bills you're struggling with
- the cards you'd clear would stay open and could be used again
- the main problem is that your income doesn't cover essentials
Our guide to what consolidation loans really cost covers the risks and the alternatives. Compare the total cost, not only the repayment, before deciding anything.
Frequently asked questions
What is the fastest way to get out of debt?
There's no guaranteed fastest method. Keeping priority bills paid and using free help come before any quick fix such as a payday loan.
Which debts should I pay first?
The National Debt Helpline lists rent or mortgage, council rates or body corporate fees, an essential car, and energy and water as the highest priorities. The right order for you depends on your circumstances, and a financial counsellor can help.
Is $20,000 a lot of debt?
It depends on your income, your essential costs and what the debt costs you in interest and fees. A financial counsellor can look at the whole picture with you for free.
Will a hardship arrangement affect my credit score?
Moneysmart says a hardship arrangement doesn't affect your credit score. Your credit report shows the arrangement, but the listing is deleted after 12 months.
How often can a debt collector call me?
The ACCC and ASIC guideline says phone contact should be limited to 3 calls a week or 10 a month, at set times. If a collector harasses you, you can complain to AFCA.
Taking the first step
Start by listing what you owe and protecting your priority bills. Then call or chat with the National Debt Helpline, or ask your lender's hardship team what help is available.
This article provides general information only and is not personal financial or legal advice. Consider speaking with a free financial counsellor or qualified legal adviser about your circumstances.
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Written by
Trent Cray
Finance Specialist, Loans 123
Trent is a Finance Specialist at Loans 123 in Victoria Park, Perth. He helps customers compare more than 30 lenders to find car, personal and business finance that suits their situation.
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