Debt options in Australia compared
Hardship variation, informal payment plan, debt consolidation, debt agreement, personal insolvency agreement and bankruptcy side by side.
This table compares the types of debt solution available to individuals in Australia, from informal steps to the three formal options under the Bankruptcy Act 1966. It does not compare firms. Thresholds referred to are AFSA's indexed amounts for the period from 20 September 2026; check them on AFSA's website. Use the table with the overview of debt help options and the decision checklist.
Select a column header to sort.
| Option | How it works | Can suit | Watch out for |
|---|---|---|---|
| Hardship variation (National Credit Code s 72) | You tell a lender you cannot meet repayments; it must respond within set timeframes and may extend, pause or reduce repayments | A temporary drop in income with a realistic recovery | Interest usually keeps running; hardship information can show on your credit report for 1 year |
| Informal payment plan or settlement | You or a financial counsellor negotiate directly with each creditor, sometimes with interest frozen or a lump-sum discount | Manageable debts, or a lump sum from family, super release or an asset sale | Get every agreement in writing; creditors do not have to agree |
| Debt consolidation loan | A new loan pays out several debts at a lower rate | Good credit and a genuinely lower total cost | Longer terms raise total interest; the old cards must be closed |
| Debt agreement (Part IX) | Binding agreement with unsecured creditors to pay an affordable amount, normally over up to 3 years, through an administrator | Insolvent people under AFSA's debt, asset and income limits who can pay something regularly | Act of bankruptcy, NPII record for at least 5 years, credit report listing; fails if 6 months in arrears |
| Personal insolvency agreement (Part X) | Formal deal with creditors run by a controlling trustee; no debt, asset or income limits | Higher incomes or larger debts, or offers of assets or third-party funds | Trustee costs can be substantial; needs a special resolution of creditors |
| Bankruptcy | A trustee takes control of divisible assets; most unsecured debts are released at discharge, normally 3 years and 1 day after filing | Debts that cannot realistically be repaid and few assets at risk | Income contributions, travel consent, credit disclosure duty, some jobs and director roles affected |
| Doing nothing | Creditors default the accounts, sell them to collectors or sue | Rarely suits; some people with no income or assets are 'judgment-proof' for a time | Court judgments, enforcement, a bankruptcy notice; defaults stay 5 years on credit reports |
Figures are rules and thresholds, not quotes. Debt agreement and bankruptcy thresholds are indexed twice a year; confirm them on AFSA's website. Credit report retention periods are set under Part IIIA of the Privacy Act 1988 and explained by the OAIC. For free, independent advice call the National Debt Helpline on 1800 007 007 or visit ndh.org.au. This is general information, not legal or financial advice.