Pitfalls, Complaints and Free Help
Hardship notice for a personal loan: your rights under section 72 of the National Credit Code
How to ask your lender for financial hardship help on a personal loan in Australia, what section 72 requires, the 21-day response timeframes, what to include and what to do if refused.
If you cannot meet your personal loan repayments, you can give your lender a hardship notice under section 72 of the National Credit Code. It can be oral or written and simply needs to tell the lender that you are, or will be, unable to meet your obligations. The lender then has to respond within set timeframes — generally 21 days if it does not ask for more information — and, if it refuses to change your repayments, it must tell you why in writing and tell you about your right to complain to the Australian Financial Complaints Authority (AFCA). Ask early, before payments are missed, and get free help from the National Debt Helpline on 1800 007 007.
This guide is part of personal loan mistakes to avoid. It is general information, not legal advice; timeframes and procedures should be checked with the lender, a financial counsellor or a community legal centre.
When you can give a hardship notice
You can give a hardship notice if you are, or reasonably expect to be, unable to meet your obligations under a regulated credit contract. Common causes include:
- job loss or reduced hours,
- illness or injury,
- relationship breakdown or family violence,
- a natural disaster,
- unexpected expenses such as caring responsibilities.
There is no minimum loan size: the hardship provisions apply to regulated consumer credit contracts generally, including personal loans, car loans and credit cards. Since 10 June 2025 they also apply to buy now pay later contracts, with some modifications for low cost credit contracts.
What the lender must do — the timeframes
| Step | Timeframe (National Credit Code s 72) |
|---|---|
| Lender may ask you for information it reasonably needs | Within 21 days of receiving your hardship notice |
| You provide the requested information | Within the period stated in the request (generally 21 days) |
| Lender responds if it did not request information | Within 21 days of receiving your notice |
| Lender responds after you provide information | Within 21 days of receiving the information |
| Lender responds if you do not provide the information | Within 28 days of its request |
The response must say whether the lender agrees to change the contract or refuses. If it agrees, it must set out the new arrangement. If it refuses, it must give reasons and tell you about AFCA.
The Code also restricts enforcement while a hardship notice is being dealt with: in general, a lender cannot begin enforcement proceedings until it has responded and certain periods have passed. Check the rules for your situation with a financial counsellor.
What a lender can agree to
- reducing repayments for a period,
- pausing repayments (a moratorium) for a period,
- extending the term so repayments are lower,
- waiving or reducing fees or interest in some cases,
- a combination of these.
Illustrative example
You have $12,000 left on a personal loan at 11% with 30 months to go; the repayment is about $460 a month. You lose overtime and can now afford $300.
| Arrangement | Effect (illustrative) |
|---|---|
| Extend the remaining term to 48 months | Repayment falls to about $310 a month; remaining interest rises from about $1,780 to about $2,890 |
| Three-month pause, then resume | Interest keeps accruing during the pause, so the balance rises by about $330 and later repayments or the term increase |
| Reduced payments of $300 for six months | Shortfall of about $960 plus interest is added back later |
A hardship arrangement may be recorded as financial hardship information on your credit report for one year, rather than as missed payments. See credit scores and comprehensive credit reporting.
How to give a hardship notice
- Contact the lender's hardship team by phone, email, online form or letter. A written notice gives you a record.
- Say clearly that you are giving a hardship notice under section 72 of the National Credit Code because you are unable to meet your obligations.
- Explain what has happened, whether it is temporary or long-term, and when you expect your situation to change.
- Propose what you can afford, based on a realistic budget.
- Provide information the lender reasonably asks for, such as a payslip or a medical certificate, by the deadline.
- Keep records of dates, names and reference numbers.
Sample wording (adapt to your situation)
If the lender refuses or does not respond
- Ask for the reasons in writing if they were not given.
- Make a complaint through the lender's internal dispute resolution process.
- If you are not satisfied with the response, or the lender does not respond in time, lodge a complaint with AFCA (1800 931 678). AFCA's process for financial difficulty complaints can move quickly, and lodging a complaint generally pauses debt recovery action while it is considered.
- Get help from a free financial counsellor or community legal centre.
Hardship versus other options
| Option | When it fits |
|---|---|
| Hardship variation | Temporary or manageable income drop |
| Debt consolidation | Only if you can afford the new loan and close old accounts; see debt consolidation risks |
| Selling the financed asset | If the asset is worth more than the loan and you can manage without it |
| Insolvency options | Serious, long-term debt problems — get advice first |
Frequently asked questions
Does asking for hardship hurt my credit report?
A hardship arrangement can be recorded as financial hardship information, which stays for one year and is shown differently from a missed payment. Missed payments without an arrangement are generally more damaging.
Can the lender charge fees for a hardship variation?
Check your contract and ask. Many lenders do not charge for hardship arrangements, and charging could be a matter to raise with AFCA if it seems unreasonable.
Can I give a hardship notice after I have defaulted?
Yes, you can give a hardship notice at any time you are unable to meet your obligations, but options narrow once enforcement has begun. Act as early as possible.
Do I need a financial counsellor?
No, but a financial counsellor can help you prepare a budget, write the notice and negotiate. The National Debt Helpline service is free and confidential.
Sources and where to check
- National Debt Helpline — sample letters and free financial counselling, 1800 007 007
- ASIC Moneysmart — financial hardship and problems paying loans
- Federal Register of Legislation — National Credit Code s 72 and enforcement provisions
- Australian Financial Complaints Authority — financial difficulty complaints
