What is debt?
Debt is money that is owed to another person or organisation. Often, the money will be owed under an agreed contract, whether written or spoken.
A person or organisation in debt is known as a ‘debtor’. A person or organisation that is owed money is known as a ‘creditor’.
Both debtors and creditors have legal rights. There may be reasons why a debtor does not have to pay a creditor in full.
What to do if you can't repay your debt
If a debtor cannot repay a debt by an its due date, it is important to seek advice and take action as soon as possible. Suggested contacts are provided on this page.
Services that can help
There are free financial counselling services that can help in dealing with debt.
This includes the:
- Consumer Action Law Centre – have resources and a Legal Help Line. You call 1800 466 477, or if you're a First Nations client, you can call the Koori Help Line on 1800 574 457.
- National Debt Helpline – can be called on 1800 007 007. This not-for-profit organisation that provides debt advice and financial counselling for complex situations.
You can also Speak to us for legal advice and explore resources listed on the Other support for debt and bankruptcy page.
First Nations clients
First Nations clients can call the dedicated Mob Strong Debt Helpline by calling 1800 808 488.
This is run by the Financial Rights Legal Centre who also have useful resources for clients and caseworkers or those who provide support to those with financial difficulty.
Other resources and support can be found on Other support for debt and bankruptcy.
Note: It’s important to know that your unpaid debt may result in a creditor either:
- seizing assets (taking your property or possessions of value) that secured the loan
- taking you to court in order to recover the debt.
Find out what happens if a creditor wants to take legal action in court, visit Notice of legal action – being sued.
Your rights
If you are in debt you have the right to be protected from illegal behaviour from creditors and debt collectors.
You have the right to:
- not be discriminated against
- have your privacy protected
- get help
- question the debt.
Read more about your rights by visiting Debtor’s rights.
Exceptions to paying a debt
There may be a legitimate reason why you don’t have to pay your debt.
This could include:
- Disagreement with the contract.
- Your only income comes from Centrelink or Workcover and you do not own any significant assets.
- The debt is more than six years old, and you have not made a payment on the debt or admitted in writing that you owe it within the last six years.
For more information visit Reasons you might not have to pay your debt.
This is a complex area of law and you should seek legal advice.
Explore our publications and resources
Explore our related pages
- Debtors' rights
- Reasons you might not have to pay your debt
- Creditor notices and letters of demand
- Debt collection
- Options before legal action
- Notice of legal action – being sued
- Debts owed under the Status Resolution and Support Services program
- Other support for debt and bankruptcy.
Support from other websites
- Consumer Action Law Centre: access free legal on consumer issues and consumer financial problems via their Legal Help Line and Koori Help Line.
- Australian Financial Complaints Authority: this free ombudsman service can help consumers and small businesses with complaints about a financial service or product if you owe them a debt.
- National Debt Helpline: this helpline and website has useful resources on solving debt problems and understanding your rights if you owe a debt. You can also get free advice by calling their helpline.
- Moneysmart – Managing debt: this Australian Government website page provides information on where to get help with a debt, with links to information on managing debt.
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