Tough times: How to get loan hardship support

If you are behind on your loan repayments, or can see that you soon will be, knowing what loan hardship support is out there and acting early can make a big difference to the outcome.

Loan hardship support programs are available across consumer credit, from personal and car loans to home loans and credit cards. There are different types of assistance depending on your lender and circumstances, but options generally include:

• • Payment deferral – pausing your repayments for a set period
  • Reduced repayment plan – temporarily lowering your monthly payment
  • Loan extension – adding time to your loan term to reduce the monthly obligation
  • Fee waivers – removing late fees or default fees while you're under stress
  • Interest rate freeze – in some cases, pausing interest accrual temporarily

If you are facing genuine hardship, be it through job loss, serious illness or major unexpected expenses, your lender is legally required under the National Credit Code to consider your hardship application.

The key is to ask to speak to the lender’s loan hardship team, rather than going through the standard customer service contacts, and use the term “financial hardship” or “hardship notice” to be clear about what you need. You are asking for a variation to the terms of your loan because you cannot meet your current obligations.

 

 

Act early and be realistic

The biggest mistake borrowers make when they run into difficulty is waiting too long to talk to their lender about their circumstances.

The quicker you make an agreed repayment arrangement with your lender, the less likely a default will be listed on your credit report. The creditor cannot list a default when you have asked for a repayment arrangement (though they may do so 14 days after they reject a request).

Financial counsellors are reporting a rise in early calls from Australians seeking advice before they miss the first repayment. In the six months to January 2026, 12 percent of mortgage holders said they had failed to make at least one repayment, about half missing a single instalment and the rest missing more than one. Those who contacted their lender before missing a payment had more options available to them.

As outlined in our article about managing loan repayments, when you are applying for loan hardship assistance, you will need to ensure you have all the necessary paperwork before contacting the bank. This includes your loan contract and any amendments; bank statements from the last three months; payslips or Centrelink statements that show proof of income; evidence of the hardship (such as a redundancy letter or medical certificate); and a summary of your outgoings and incomings.

When you’re negotiating a repayment plan, it is also very important to be realistic about what you can pay. A report by the Australian Securities and Investment Commission (ASIC) showed 40 percent of consumers who received hardship assistance fell into arrears again as soon as the hardship period ended.

 

 

When your lender fails to respond

Despite the legal protections available to consumers, lenders do not always do the right thing. ASIC’s 2024 hardship report found widespread failures across 10 major lenders, including that:

• • They didn’t make it easy for consumers to give a hardship notice
  • Their assessment processes were often difficult for customers
  • They didn’t communicate effectively with their consumers
  • They didn’t provide adequate support to consumers already in distress

The regulator took direct action against several lenders, with the Federal Court ordering National Australia Bank in August 2025 to pay $15.5 million in penalties for failing to respond to customers facing hardship within the 21 days required by law.

While the Australian Financial Complaints Authority (ACFA) notes that financial difficulty complaints had dropped by 17 percent in 2024-2025, the authority said the volume was still too high.

If your lender hasn’t responded to a hardship request within the required time frame, or has rejected your request without a clear written reason, you can escalate the loan dispute by making a formal complaint.

 

 

How to make an effective loan complaint

The strongest financial complaints are to the point, supported by documentation, dates and amounts. The more organised you are before you start the formal complaint process, the better.

Step 1: Gather all evidence for the loan dispute

This includes your original loan contact; all statements and transaction records; copies of all correspondence (including any chat transcripts); records of any phone calls (date, time, name of person you spoke to, what was agreed). Ensure you also have a copy of your hardship application and the lender’s response, or evidence they did not respond.

Step 2: Lodge a formal complaint with the internal dispute resolution team

Start with the lender’s internal dispute resolution (IDR) team, not the general customer service contacts. Use the word “complaint” clearly in writing. Lenders should resolve complaints within 30 days, or 21 days for hardship and debt collection matters.

Step 3: Keep clear records, including any correspondence after the complaint

Every interaction is potential evidence should you need to take this dispute further, either through the courts or to AFCA. Your lender is required to suspend any collection or recovery action once your complaint has been registered with AFCA, so if you receive debt collection letters or phone calls demanding repayments after that point, add them to your records, report them to the IDR team and advise AFCA.

 

 

When and how to escalate to AFCA

AFCA is a free, independent external dispute resolution service available to all Australians with financial complaints. It can make binding decisions that the lender must comply with.

You can escalate the loan hardship complaint to AFCA when your lender:

• • Hasn't responded to your complaint within 30 days (or 21 days for hardship matters)
  • Has rejected your hardship request without adequate written explanation
  • Has continued debt collection or default action despite an active complaint or payment arrangement
  • Provides an unsatisfactory outcome through the internal process
  • Has caused you to suffer financial loss because of an error they did not fix

When AFCA receives your complaint, they encourage the lender to contact you quickly to find a solution. If one can still not be reached, AFCA assigns a case worker from its financial hardship team to investigate. The case worker may organise a conciliation conference, which they will lead, to try to find a fair solution. In 2025-2025, complainants secured more than $390,000,000 in compensation and refunds.

For help navigating the process, see our AFCA complaints page.