What counts as hardship
Moneysmart defines financial hardship simply: being unable to make a credit or loan repayment. It also says it is common. Australia recorded more than 280,000 hardship notices in the 2024/25 financial year, and the five most common reasons Moneysmart gives are overcommitment, reduced income, medical reasons, unemployment and separation.
Moneysmart’s advice is to act straight away, so that a small problem doesn’t become a big one, and it notes that the earlier help is sought, the more options there are.
How a request is made
The first step Moneysmart describes is to reach the lender’s hardship team, by phone, email or chat. Searching the lender’s website for “hardship” is one way to find it. For banks, Moneysmart points to the Australian Banking Association’s financial assistance hub; for credit unions, mutual banks and building societies, to the Customer Owned Banking Association’s member page.
Moneysmart says a lender won’t ask for your life story. It lists the kinds of questions a lender may ask:
- the reason for the hardship
- current income and other major expenses, such as other loans
- what repayments can be afforded
The shapes an arrangement can take
The lender’s hardship team assesses the situation and works out what help is available. Moneysmart describes the options as either temporary or permanent:
Temporary
Such as deferring a payment for a time.
Permanent
Such as varying the loan itself.
Either way, Moneysmart’s guidance is to agree only to an amount that can actually be paid, using its budget planner if the figure isn’t clear. If the new arrangement turns out to be too much, its advice is to let the lender know straight away, keep paying what you can, and negotiate a new arrangement.
Home loans: the hardship variation
For a mortgage, Moneysmart calls the change a hardship variation: changing the terms of the loan, or temporarily pausing or reducing repayments. Its page on problems paying your mortgage sets out what a request usually covers: the loan’s details, that you want to change the repayments because of hardship, why, how long the problem may last and what can be repaid.
Moneysmart says a lender must write to you within 21 days with the outcome of a hardship request. If it asks for more information, it must respond within 21 days of receiving it.
Moneysmart also says a hardship variation can still be applied for after a lender sends a default notice, which gives 30 days to make up the missed payments.
If the answer is no
A lender that refuses must give reasons. From there, Moneysmart’s how to complain page describes two steps.
- A formal complaint to the lender. Moneysmart calls this internal dispute resolution (IDR). It suggests putting the word “complaint” in the heading, a clear explanation of the problem and the outcome wanted, and copies of relevant documents, keeping the originals.
- An external dispute resolution scheme. If the business doesn’t respond in a reasonable time, or you aren’t happy with how it dealt with the complaint or with its offer, Moneysmart says you can go to an EDR scheme, which hears complaints for free. For credit, finance and loans, that is the Australian Financial Complaints Authority (AFCA).
Moneysmart adds that free legal advice may be available from a community legal centre for help with the process.
Help with the request itself
Moneysmart says a financial counsellor can help with applying for hardship, and that the service is free and confidential. It points to the National Debt Helpline for financial counsellors. Other bills follow their own rules: tax, energy, council rates and fines each have a separate guide on this site.