Work out the regular repayment needed to clear a debt over a chosen period at a given interest rate, for example a frozen-interest payment plan or a hardship term extension.
Before a formal insolvency option, most people should test whether they could repay with more time or less interest. A lender can agree to a hardship variation under section 72 of the National Credit Code (for example a longer term or a pause), and many creditors and collectors will agree to a payment plan, sometimes freezing interest, if a financial counsellor puts a realistic budget to them.
Enter what you owe, the interest rate that would apply during the plan (0 if the creditor agrees to freeze interest), the number of years and any one-off fee. The calculator uses level monthly repayments: repayment = P × r ÷ (1 − (1 + r)^−n), or simply P ÷ n when the rate is zero.
Worked example (illustrative): $15,000 owed across two cards. With interest frozen over 3 years the plan needs $15,000 ÷ 36 = about $417 a month. If interest kept running at 20% a year, the same 3 years would need about $557 a month and cost about $5,070 in interest. At $417 a month and 20% interest the debt would take about four and a half years to clear.
Compare the monthly figure with your budget surplus. If it is affordable, an informal plan avoids an insolvency listing altogether. If it is not affordable even with interest frozen, look at the debt option decision checklist with a counsellor. Limits: the tool assumes no new spending, a constant rate and monthly payments.
Worked Examples and Checklists
How to ask several creditors for financial hardship help at once in Australia, the National Credit Code s 72 timeframes, worked numbers for a household, and non-credit hardship programs.
Worked Examples and Checklists
How to negotiate a payment plan, interest freeze or lump-sum settlement with Australian creditors and collectors without a formal insolvency option, with worked offers and a pro-rata split.
