What Is My Obligation on Hardship?

Why hardship matters

Some debtors genuinely cannot pay in full when asked, and Australian regulators expect creditors to treat genuine hardship fairly rather than apply relentless pressure regardless of circumstances. Recognising hardship is therefore part of conducting collection fairly, not a favour or an optional courtesy — it sits squarely within the conduct standards that apply to recovery.

Beyond compliance, a sensible hardship response is often the most effective path to actually being paid. A debtor placed on a realistic arrangement they can sustain usually pays more, over time, than one pushed beyond their means until they collapse, dispute, or complain. So the fair course and the commercially sensible course tend to coincide. Treating hardship as something to manage thoughtfully, rather than a threat to be resisted, generally serves both the debtor and your own interests.

What a fair response looks like

Listening to the debtor, asking for reasonable information about their situation, and considering arrangements such as instalments or a temporary pause are the hallmarks of fair conduct in the face of hardship. You are entitled to seek enough detail to assess whether the difficulty is genuine; the obligation is to engage with it seriously, not to accept every claim at face value.

The aim is a realistic plan that the debtor can actually sustain, recorded clearly so that both sides know where they stand and what has been agreed. Flexibility within reason is a strength here, not a weakness — an arrangement that bends a little to the debtor's circumstances is far more likely to hold than a rigid demand that ignores them. Document the arrangement and the basis for it, so the agreement is clear and your fair handling is evident.

Where pressure becomes a risk

Dismissing a credible hardship claim out of hand, or continuing aggressive collection despite it, can tip ordinary recovery into conduct that draws complaints or regulatory attention. The presence of a real debt does not make pressure on a genuinely struggling debtor acceptable, and persistence in the face of evident hardship is exactly the kind of conduct that attracts scrutiny.

Recognising hardship is therefore both fair and protective: it serves the debtor and shields you. The two concerns are closely linked, because much of what makes pressure on a hardship case risky is that it shades into harassment. Avoiding harassment claims is closely connected, and the same restraint that keeps you clear of harassment also keeps your hardship handling sound.

How a partner helps

A professional recovery partner is experienced in distinguishing genuine hardship from mere delay, structuring sustainable arrangements, and documenting them properly so that both the agreement and the fairness of the process are clear. That balance — firm where firmness is warranted, accommodating where the circumstances genuinely call for it — is difficult to strike consistently in-house but central to a good partner's craft.

Handing hardship cases to a partner also removes an uncomfortable burden from you, particularly where the debtor is a customer you would still like to keep. The partner can manage the sensitive conversations and the arrangement, while keeping you informed, leaving you free of the awkward position of pressing someone who genuinely cannot pay. You can refer a debt to draw on that experience and judgement.