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Money matters to secure your financial future.

4e. What to do when your debts are out of control

Est. read time: 4 min

If you are having trouble managing your debts, this section contains some steps to help you make a payment plan and get back into control. It’s important that you take action – whatever you do, don’t do nothing.

Make a list of all your debts


Make a list of all the money you owe.   Include credit card debts, personal loans, mortgage, utility bills and money owed to family and friends. Where relevant include the following:

  • How much you owe;
  • What is the minimum monthly payment;
  • What is the interest rate;
  • Who do you owe it to; and
  • What is the debt for (e.g. mortgage payments, credit card debt, personal loan).

Talk to the people you owe money to


It is important to get in touch with your utility providers, banks or any other company and let them know you are experiencing difficulty managing your payments. Many of these companies will have hardship teams who are people you can talk to when you aren’t managing. It’s best to speak to the hardship team earlier rather than later, to try to stop the problems getting out of control.

Specialists in the hardship team can:

  • Assess your situation;
  • Work out what help is available; and
  • Help you make a payment plan that works for you, including paying in instalments and/or changing when your payments fall due.

If you own your home and are struggling with your mortgage payments, there are options available including:

  • If the problem is short term, you can ask your bank for a temporary pause or reduction in repayments. This is called a hardship variation;
  • In the longer term, you may be able to find a mortgage with cheaper fees or better rates, but be careful about hidden costs. It’s important to know that if you are already behind in your repayments, you can’t usually change to a different loan type or interest rate with your bank;
  • In some limited circumstances you can access your superannuation to help pay your mortgage – this should only be considered as a last resort.

More information on hardship support that is available can be found in section 3f. Financial assistance for living costs.

When agreeing to a repayment plan, make sure it’s one you can afford. There is no point agreeing to something you won’t be able to keep up. There are a lot of organisations that offer a solution to your debt problems – it may be referred to as debt consolidation. However you need to be careful as the cost of these solutions can sometimes add to your existing debt.  Way Forward is a non-profit organisation that can help with debt consolidation.  It’s a good idea to speak to a financial counsellor or ring the National Debt Helpline on 1800 007 007 before signing up for debt consolidation.

More information about your options when you are struggling with your mortgage, how to talk to banks and pitfalls to avoid can be found at the MoneySmart website.

Prioritise your payments


Determine which of your obligations you want to pay first with any available money:

  • Some people like to pay some small bills off first which gives them a sense of achievement and momentum, as well as reducing the number of late fees incurred;
  • Others like to pay off the ones that have the most expensive interest rate, as this will save the most money;
  • Consider the consequences – if you do not meet your mortgage payments (or your agreed variation to your mortgage payments) you could lose your house.

Consider your expenses and apply any spare money to the problem


Apply any spare money you have to your debts. Extra money might come from:

  • a second job or some weekend overtime to earn a bit more;
  • lump sums like a tax return; and
  • selling something that you don’t need or don’t use any longer.

You should also review your expenses – consider which things you spend money on count as “needs” and which as “wants”. Eliminating, or significantly reducing the money spent on things you “want” (for example new clothes, a phone upgrade, an expensive meal) rather than “need” (food and water to maintain your health, a roof over your head, basic health care and hygiene needs) can contribute to reducing your debt.

These strategies can help to reduce the effect of compound interest (interest on interest) as well as chipping away at the amounts you owe.

Get some help 


Sorting out debt is difficult on your own. Discuss your situation with a trusted friend or family member you consider to be “good with money”, or get in touch with an independent financial counsellor. Financial Counsellors work for charitable organisations across Australia and offer free, confidential and independent advice to people experiencing financial hardship.  Most importantly, financial counsellors are there to work with you, and won’t judge you for your situation. More information on financial counselling is available on the MoneySmart website, or you can visit the Financial Counsellor’s Association WA website or the Financial Counselling Network website for information and services specific to Western Australia.

The Consumer Credit Legal Service provides legal advice and assistance to people with issues about their credit and debt, including hardship variations.

Free financial counselling can also be accessed through the National Debt Helpline on 1800 007 007, or live chat online.  You can also contact the Financial Counselling Network Emergency Relief and Food Access Service by calling 1800 979 777, 9.30am – 5pm Monday to Friday (excluding public holidays), or by emailing  This service provides referrals for people in need of financial assistance or help putting food on the table.

You can contact the Good Shepherd Financial Independence Hub to discuss money and finances, or what to do if you have found out about debt in your name. For a personalised and confidential one-one-one service, you can send them an enquiry or call them on 1300 050 150 (Mon – Fri, 9am – 5pm AEST).  Interpreter services are available.

Prepare a budget


It can be helpful to have a budget that includes your debt payments so you can keep track of what is coming in and out. Once your debts are under control a budget can still help by making sure you don’t spend more than you earn. Consider building an emergency fund into your budget, so that in the event something unforeseen happens in the future you can avoid getting back into expensive debt. You can find more specific information about preparing a budget in section 4a. Budgeting.

You can find more information about managing debt at the MoneySmart website and the National Debt Helpline website.


Bankruptcy is very serious and has consequences both short and long term. Bankruptcy allows you to waive many types of debt, but means you will be on an insolvency register for life, and it affects your credit file, some future jobs, and international travel. It should always be considered a last resort. If you are considering bankruptcy, make sure you speak to the National Debt Helpline or a financial counsellor first.
[Article last updated 28/3/22]
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