Debt management in Australia: every option, honestly explained

Most people in financial trouble in Australia don’t need a paid debt management firm. Some do. This article is honest about which is which.

“Debt management” in Australia covers a spectrum of six real options, from a free phone call to the National Debt Helpline at one end through to bankruptcy at the other. The right choice depends on how much you owe, who you owe it to, what your income looks like, and whether your situation is short-term or permanent. This guide explains every option, names the costs, and points at the free alternatives first — because most pages on this topic don’t.

If you are mid-problem and want a person to talk to right now, the National Debt Helpline is on 1800 007 007 (Mon–Fri 9:30am–4:30pm). It’s free. It’s independent. It’s government-funded. For many people reading this, that call is the right first move.

Key takeaways

• “Debt management plan” is not a regulated term in Australia. It’s marketing language used by both paid firms and the free service Way Forward for very different products.
• The six real options are: an informal hardship arrangement (free, you do it yourself or with NDH’s help), a commercial DMP (paid), a free DMP via Way Forward, a Part IX debt agreement (statutory), a Part X personal insolvency agreement (rare), and bankruptcy.
• Free help comes first. The National Debt Helpline (1800 007 007) and Way Forward Debt Solutions are independent, free, and excellent. Many situations need nothing more.
• Since 1 July 2021, paid debt management firms in Australia must hold an Australian Credit Licence and be AFCA members — a regime designed to weed out the worst actors of the 2010s.
• Hardship Hub charges $49 application fee, plus $2.20 per creditor payment, runs informal hardship arrangements under section 72 of the National Credit Code, and operates as an authorised representative of Revive Financial Pty Ltd. We disclose the full structure below.

What “debt management” actually means in Australia

The phrase “debt management” covers two quite different things, often mashed together by marketing copy:

• Negotiation-based debt management — varying the terms of debts you already have (paying less, paying later, pausing, restructuring) without taking on new credit. This is what we do.
• Debt consolidation — taking out a new loan to pay off existing debts. This is a different product, run by lenders, and it isn’t covered in this article.

Within negotiation-based debt management, the law in Australia recognises two formal frameworks (Part IX and Part X under the Bankruptcy Act 1966) and a number of non-statutory arrangements. The non-statutory arrangements are what most people mean when they say “a debt management plan”, even though “DMP” is not a defined legal term in Australian law.

That terminology gap matters. A free DMP run by Way Forward, a paid DMP run by a commercial firm, and a Part IX debt agreement are three different products with different costs, different consequences, and different regulators. Treating them as interchangeable is the single biggest mistake we see.

Free help first — National Debt Helpline and Way Forward

Two services are worth knowing about before you pay anyone for anything:

The National Debt Helpline on 1800 007 007. A free, government-funded phone service staffed by professional financial counsellors. They will help you draft a hardship notice, negotiate with a creditor on your behalf, escalate to AFCA if a creditor refuses, or refer you to a community legal centre if your problem is legal. There is no eligibility test. They take all calls. Hours: Mon–Fri 9:30am–4:30pm.

Way Forward Debt Solutions. A registered charity (ABN 20 628 702 821) that runs free debt management plans across multiple creditors. Funded by the Big 4 banks plus a few other lenders. Holds Australian Credit Licence 516657. If you have multiple creditors, a stable but reduced income, and you fit their eligibility criteria, Way Forward can do most of what a paid debt management firm does — for free. The only catch is the eligibility criteria, which exclude some people the paid firms would accept.

Between them, NDH and Way Forward handle the majority of what consumers in Australia actually need. If your situation fits, neither this article nor any paid product is the answer for you.

The six real options on the spectrum

Here are the six paths, in rough order from least to most consequential:

1. Informal hardship arrangement under NCC s 72

You give your lender a written hardship notice. They have 21 days under section 72 of the National Credit Code to respond. The variation can pause payments, reduce them, extend the term, or change the structure (e.g. switch a mortgage to interest-only). The arrangement is private, doesn’t involve a court or a register, and costs nothing to lodge. We explain how this works in detail in our BNPL pillar and our Westpac pillar — both worked examples of what an informal arrangement looks like in practice.

Right for: short- to medium-term hardship; one or two creditors; willingness to engage with each lender individually (or have a counsellor or paid coordinator do it for you). How a Hardship Hub Temporary Hardship Plan works.

2. Commercial debt management plan (DMP)

A paid firm coordinates informal arrangements across all your creditors and bundles the resulting payments into one direct debit you make to the firm, which then distributes the money. The product isn’t statutory. Quality varies enormously. Since 1 July 2021, any legitimate firm offering this must hold an Australian Credit Licence and be an AFCA member.

Right for: people with three or more creditors who don’t fit Way Forward’s eligibility criteria and would rather pay a coordinator than juggle several hardship notices themselves. (This is what Hardship Hub does — section below.)

3. Free debt management plan via Way Forward

A non-profit version of the above. Same coordination, no fee. Eligibility-tested. If you qualify, this is almost always the better option than paying a commercial provider.

Right for: anyone Way Forward will accept.

4. Part IX debt agreement

A statutory framework under Part IX of the Bankruptcy Act 1966, administered by the Australian Financial Security Authority (AFSA). You agree with your creditors (by majority vote) to repay a fixed sum — usually less than the full balance — over a set term, typically three years. Your name appears on the National Personal Insolvency Index (NPII), which is a public register, and the agreement is treated as “an act of bankruptcy” even though it isn’t bankruptcy itself.

Eligibility is gated by income, asset value, and unsecured-debt totals, all of which AFSA indexes every six months (20 March and 20 September). The current thresholds and the indexation history are on AFSA’s page; we link rather than restate because the figures move.

Right for: people whose situation is not short-term, who have substantial unsecured debt under the AFSA threshold, who want a clean negotiated end-state, and who have considered — with a counsellor — that the credit-file impact and NPII listing are acceptable trade-offs.

This is Part IX’s honest summary. Many ranking commercial pages on the SERP are written by firms that sell Part IX as their hero product. Treat their characterisations carefully. We don’t sell Part IX; we describe it neutrally because we don’t have a commercial reason to push you into it. MoneySmart’s comparison is also worth reading.

5. Part X personal insolvency agreement (PIA)

Also under the Bankruptcy Act 1966. Like Part IX, but for people whose debts exceed the Part IX thresholds. PIAs are unusual in consumer contexts — almost everyone who isn’t eligible for Part IX is in territory where bankruptcy is the cleaner answer. We mention it for completeness rather than as a likely path.

6. Bankruptcy

The legal end-state. Lasts three years and one day. Most unsecured debts are extinguished at the end. Affects credit for seven years. The minimum debt for which a creditor can apply to make you bankrupt against your will is currently $10,000. You can also enter bankruptcy voluntarily by debtor’s petition.

Bankruptcy is sometimes the right answer — particularly when the alternative is years of debt agreement payments on a debt that won’t shrink fast enough to justify the credit-file consequence of either option. Talk to NDH or a registered insolvency practitioner before deciding.

Comparison table: speed, cost, credit-file impact, eligibility, who runs it

Option	Cost to you	Credit-file impact	Public register?	Run by
Informal hardship (DIY or via NDH)	$0	12-month FHI flag while in place	No	You + the lender
Free DMP (Way Forward)	$0	12-month FHI flag while in place	No	Way Forward
Commercial DMP (e.g. Hardship Hub)	Stated upfront, per-payment	12-month FHI flag while in place	No	Licensed credit assistance provider
Part IX debt agreement	Admin fee taken from repayments + AFSA fees	5 years from start, or 2 years after end (whichever is later)	Yes (NPII)	Registered debt agreement administrator
Part X PIA	Trustee fees	5 years from start, or 2 years after end (whichever is later)	Yes (NPII)	Registered trustee
Bankruptcy	$0 to enter (debtor’s petition)	5 years from start, or 2 years after discharge (whichever is later); name on NPII forever	Yes (NPII)	Trustee (AFSA or private)

FHI = Financial Hardship Indicator. The 12-month flag begins from the end of the arrangement. Source: OAIC; Part IIIA of the Privacy Act 1988.

Part IX debt agreements — what they actually involve

Because Part IX is the most-pushed product on this SERP, a longer description of what you’re actually agreeing to:

1. You apply through a registered debt agreement administrator (RDAA) under AFSA’s licensing regime. The administrator drafts your proposal.
2. AFSA accepts the proposal for processing — which is itself an “act of bankruptcy” under section 188 of the Bankruptcy Act. This is the point most consumer pages don’t emphasise. From this moment, your name is recorded on the NPII even before the proposal is voted on.
3. Your creditors vote. The proposal needs a majority by value. If it passes, it binds all unsecured creditors — including those who voted against.
4. You make payments to the administrator for the term (typically three years). The administrator deducts fees and distributes the rest to creditors pro rata.
5. At the end of the term, the remaining debt is extinguished. The Part IX listing stays on your credit file for the longer of five years from start or two years from completion.

Things to know that the firms selling Part IX often understate:

• If you fail to maintain payments, the agreement can be terminated and you can be made bankrupt without further proceedings.
• The NPII is a public register. Anyone with an internet connection can search you on it indefinitely after a Part IX listing.
• Some employers, professional registrations, and rental applications treat Part IX listings the same as bankruptcy. The distinction is not always honoured commercially.
• Eligibility is capped on three thresholds — income, assets, unsecured debt. AFSA indexes them every six months.

None of this makes Part IX the wrong choice. It’s the right choice for some people. It’s the wrong choice for plenty of people who get pushed into it by firms whose product range starts and ends with Part IX. The point of this article is to make that distinction visible. Speak to NDH first. Always.

What a debt management firm is — and what a good one looks like in 2026

Until 1 July 2021, debt management was a largely unregulated industry in Australia, and the bad actors were genuinely bad. ASIC documented credit-repair operators charging four-figure upfront fees for work consumers could do for free, and DMPs that left customers worse off than the original arrangements. The National Consumer Credit Protection Amendment (Debt Management Services) Regulations 2021 brought the industry inside the credit licensing regime.

From that date, any firm offering paid “debt management assistance” in Australia must:

• Hold an Australian Credit Licence (ACL) authorising the activity, or operate as the authorised representative of an ACL holder.
• Be a member of the Australian Financial Complaints Authority (AFCA), so customers have a free external dispute path.
• Provide a credit guide before entering a contract, disclosing fees and licensing.
• Comply with responsible-lending and conduct obligations under the NCCP Act.
• Not engage in the prohibited conduct that triggered the reform — large upfront fees, false “guaranteed” outcomes, claims about removing legitimate listings.

Five questions to ask any debt management firm before you sign anything:

1. What’s your ACL number, and who is the licensee? Cross-check against ASIC’s public credit register.
2. Are you an AFCA member? If not, walk away.
3. What are the fees, in dollars? “No upfront fees” is not an answer.
4. Have you mentioned the National Debt Helpline? If they haven’t, that’s a flag.
5. Will you still help if Way Forward could help me for free? A trustworthy firm answers yes — and tells you how to apply to Way Forward first.

What this costs — paid vs free, in dollars

The most-buried information on this entire SERP. Here it is plainly:

• National Debt Helpline: $0. Government-funded.
• Way Forward Debt Solutions: $0. Charity-funded.
• Hardship Hub: $49 application fee, plus a $2.20 transaction fee for each payment we send to one of your creditors. Most plans run one payment per creditor per month, so a four-creditor plan sees four transaction fees per month. No exit fees. Current Hardship Hub fees on the pricing page — we link rather than restate in case fees change.
• Other commercial DMPs: ranges widely. Most charge a setup fee (often hidden in the first few months of repayments) plus an ongoing percentage of repayments. The 2021 regulations require this to be disclosed in the credit guide; ask for it.
• Part IX debt agreement: AFSA charges fees against the agreement; the administrator also charges fees, both upfront (rolled into the proposal) and ongoing (a percentage of payments). Combined, expect 20% or more of total payments to go to fees on a typical Part IX. Numbers will be in the proposal you’re asked to sign.
• Bankruptcy: $0 to file by debtor’s petition. The trustee may take income contributions if your income exceeds an indexed threshold during the bankruptcy period.

Where Hardship Hub fits (and where it doesn’t)

Hardship Hub provides credit assistance as an authorised representative of Revive Financial Pty Ltd (Australian Credit Licence 503321) under the NCCP Act. Our product is a Temporary Hardship Plan — a coordinated set of informal hardship arrangements lodged across all your creditors under section 72 of the National Credit Code. We do not run Part IX debt agreements ourselves.

A disclosure worth making openly: Revive Financial is also a registered debt agreement administrator (RDAA 1337), which means the parent licensee under whose ACL we operate has a separate Part IX product line. We don’t share customer leads with that product line by default; we coordinate informal hardship arrangements, and we describe Part IX neutrally in articles like this one. If a customer’s situation is genuinely better suited to Part IX, we say so — and we suggest calling the National Debt Helpline first to confirm. The full disclosure is in our Financial Services Guide. Our Target Market Determination sets out who a Temporary Hardship Plan is and isn’t built for.

Hardship Hub is right for people with three or more creditors who need coordination, who don’t fit Way Forward’s eligibility criteria, and who would rather pay a coordinator than run several hardship notices in parallel themselves. Hardship Hub is the wrong call if you have one creditor (just lodge a hardship notice yourself), if you fit Way Forward’s criteria (apply there for free), if your debts are unsecured and over the Part IX threshold (talk to a counsellor about Part IX or bankruptcy), or if your situation is permanent rather than temporary (Part IX or bankruptcy may be cleaner end-states).

What to do this week

1. Call the National Debt Helpline on 1800 007 007. Even if you’ve decided you’re going to use a paid service, an hour with an NDH counsellor sharpens the brief you bring to whoever you pay. The advice is free.
2. Read the credit contract for the debt that’s most stressful. Find the late-fee schedule, the default clause, and the contact for hardship. Most lenders bury this; it’s usually findable.
3. Decide which option fits. Use the comparison table above. If you’re still unsure, NDH’s counsellors will help you decide. So will our team, with the same caveat we’ve made throughout: free help comes first.

FAQs

Is a debt management plan the same as a Part IX debt agreement?

No. “Debt management plan” is not a regulated term in Australia — it’s marketing language used by both paid firms and the free service Way Forward for non-statutory arrangements where a third party coordinates informal hardship variations across multiple creditors. A Part IX debt agreement is a statutory product under the Bankruptcy Act 1966, administered by AFSA, that appears on the public NPII register and lasts five years on your credit file. Different products, different consequences.

Will debt management hurt my credit score in Australia?

Any hardship arrangement — informal or formal — adds a Financial Hardship Indicator to the affected account’s repayment history record under Part IIIA of the Privacy Act 1988. The flag stays for 12 months from the end of the arrangement. A Part IX debt agreement adds a separate listing that lasts the longer of five years from start or two years from completion. Bankruptcy lasts the same minimum five years, plus a permanent NPII listing. The trade-off is almost always better than ignoring debt and getting defaulted, which adds a five-year listing without resolving anything.

How much does a debt management plan cost in Australia?

Free, if you fit Way Forward’s eligibility criteria. Hardship Hub charges $49 application + $2.20 per creditor payment. Other commercial providers range widely; ask for the structure in dollars, not "no upfront fees" hand-waving. The 2021 DMF regulations require the figure to be in the credit guide they give you before contract. More questions like this on our FAQ.

Can the government write off my debt?

Not directly. The closest is bankruptcy — a legal process administered through AFSA where most unsecured debts are extinguished at the end of a three-year-and-one-day period. Some specific debts (HECS-HELP, Centrelink, child support, fines) survive bankruptcy. The Australian Tax Office can occasionally write off tax debts in cases of severe hardship; that’s a separate process you initiate with the ATO directly.

What’s the difference between a debt management firm and a financial counsellor?

A financial counsellor is a free, independent professional usually employed by a community organisation, charity, or state agency. They are bound by an industry code that prohibits selling products. A debt management firm is a paid commercial provider that holds an Australian Credit Licence (or operates under one). Counsellors give advice and negotiate; they don’t take payments from you to coordinate creditors. The National Debt Helpline connects you with a counsellor for free.

Is Way Forward really free?

Yes. Way Forward Debt Solutions is a registered charity (ABN 20 628 702 821) holding ACL 516657, funded by the Big 4 banks plus a few other lenders. They charge consumers nothing. Eligibility criteria apply — not everyone qualifies — but if you do, this is genuinely the better option than paying a commercial provider for the same service.

What’s the unsecured debt limit for a Part IX debt agreement in 2026?

AFSA indexes the threshold every six months (20 March and 20 September). The current figure, plus the asset and after-tax income thresholds that also apply, is on AFSA’s indexed amounts page. We link rather than restate because the figures move.

If you’re in this situation right now

Call the National Debt Helpline on 1800 007 007. If your situation is multi-creditor and Way Forward isn’t a fit, talk to us — we’ll tell you honestly whether a Temporary Hardship Plan is the right call. If your situation is permanent and the debts are large, ask NDH about Part IX, Part X, or bankruptcy with a counsellor in the room. The right answer is the one that fits your situation, not the one that fits the firm you happen to find first on Google.