Financial Hardship Assistance: How to Ask for Help

The pay has landed, and it won't stretch to the loan repayment, the power bill and the phone. Maybe your shifts were cut, or a rent rise took the margin that used to cover them. The payments are still set to come out on their usual dates, and none of the providers know yet.

That's a hard spot, and a common one. Hardship help is part of the rules lenders and telcos work under, not a favour you have to earn.

You can ask before anything is missed

Financial hardship means you can't make a repayment or pay a bill, or you can see that you won't be able to soon. Under the Banking Code, the rules banks sign up to, a bank's help covers repayments you expect to miss, not only ones already overdue, and a telco has to offer help whether your difficulty is short or long term.

Waiting has its own cost: a utility that hasn't heard from you can suspend or disconnect the service, and missed payments can harm your credit score.

Find one amount to share between providers

Every provider will ask what you can afford, and your answer has to work for all of them at once. Agree to each request one call at a time and the promises can add up to more than the pay holds.

You don't have to work this out or make the calls alone. A free financial counsellor can help with the numbers and negotiate with providers for you, and a bank will deal with your counsellor once you give it their details in writing. Start with the National Debt Helpline on 1800 007 007; our guide to free financial counselling explains what a counsellor does.

Start with what actually lands each fortnight. Take out rent, food, transport and anything else you can't go without; what's left is the amount to share between repayments and bills. Our guide to money left before payday walks through finding that number.

Then list everything that has to come out of it: loans, card minimums, bills, the phone and any buy now, pay later instalments. Clova, our budgeting app, brings your accounts from every bank into one view, so repayments leaving different accounts end up on the one list.

Meet Ari, a made-up 23-year-old whose hours were cut. Her pay is now $1,000 a fortnight, and after rent, food and transport she has $200 left. Her personal loan, power and phone usually take $330.

Ari asks each provider for the amount beside its name. If one proposes more, she can explain that the rest of her $200 is already promised elsewhere.

What to say when you ask

You can ask by phone, email or chat, and a telco has to publish its payment assistance policy on its website. A lender will usually ask why you're struggling and what you can afford to repay, along with your income and major expenses, including other loans.

Ari's request to her bank could sound like this:

I'm in financial hardship because my hours at work were cut. My income is now $1,000 a fortnight, my essentials are $800, and I can afford $100 a fortnight on this loan. Please assess me for hardship assistance and confirm the next steps in writing.

Have these in front of you when you ask:

• your account or customer number
• what changed and how long you expect it to last
• proof of income, such as recent payslips or a Centrelink statement
• your essential costs and other repayments, from your list
• any overdue or disconnection notices

Ask what the help changes

A bank might let you pay only the interest for a short time, stretch the loan over a longer term or put repayments on hold for a while. A telco has to offer to push back a bill's due date and a payment plan based on what you can pay, and it may also waive or discount part of a bill or move you to a cheaper plan.

Energy retailers run hardship programs under their own rules, and our guide to help with energy bills covers what to ask for there.

Most of this help moves payments later rather than removing them, which can cost more interest over the life of a loan. Here's Ari's loan, with $2,000 left at $200 a fortnight, if the bank agrees to $100 for six pays.

Smaller repayments can still be the right call. These questions clarify the cost before agreeing:

• What happens when it ends: back to the usual amount, a higher one or a catch-up payment?
• Do interest and fees keep adding, and what will it cost in total?
• Will it show on your credit report or affect other accounts?
• Do any direct debits change, or do you need to change them yourself?

Get it in writing and keep a note

A bank that follows the Banking Code has to tell you in writing whether it will help and why. If it changes your arrangement, the letter sets out the new repayments, what happens when the arrangement ends and any effect on your credit history. Smaller help, such as a short deferral, can come without that detail, so ask for it.

A written agreement before the first new payment helps confirm the terms; a short contact record can include:

• the date, how you got in touch and who you spoke to
• the reference number
• anything they asked you to send, and by when
• what was agreed, and when they'll get back to you

Once each amount is agreed, line it up with the pay that covers it. For a monthly bill on fortnightly pay, matching monthly bills to fortnightly pay shows how.

If the new amount doesn't work

An arrangement that sounded fine on the call can still fall short a few fortnights in. If it does, tell the provider straight away, keep paying what you can and ask for a new arrangement you can afford. Going back a second time is part of the process.

If a provider won't help, or you're unhappy with its answer, complain to it first, ideally in writing with "complaint" in the subject line. For a bank or lender, the next step is the Australian Financial Complaints Authority, a free, independent service on 1800 931 678. A telco has to resolve a hardship complaint within two business days, and if you're still unhappy you can go to the Telecommunications Industry Ombudsman.

A note from us

A hardship request goes best when it starts from honest numbers, even when they're smaller than you'd like. Clova puts each purchase in a category, so when a provider asks what your essentials cost, you can answer from what you actually spent.