Managing money and debt

Find out how to manage debt to pay it off faster and feel in control of your money.

Managing debt

Debt occurs when you owe more money than you have. When you can’t pay your debts you can find yourself in financial hardship. Debt can easily get out of control if you don’t know how to manage it.

When there isn’t enough money in your budget to pay all your debts, you need to put together a plan. The steps below can help.

Step 1 - identify and prioritise your debts

Identify and prioritise your debts by:

  • who you owe money to
  • how much you owe, and
  • the interest rates you’re paying

Step 2 - identify your expenses

When you know what you spend your money on, you can work out where you can spend less while you pay off your debts.

Read more about how to budget.

Step 3 - decide on your spending priorities

Once you know your debts and expenses, you can decide on your priorities. Think about which items you really need and which are extras you could do without.

Step 4 - take action

Take action as soon as you know you are in debt. Talk to the people you owe money to. Many businesses have options that can help you get out of debt.

By taking action, you can stop a small debt from getting bigger.

Talk to your creditors

Talking to the people you owe money to can be stressful. Using a financial counsellor may help you.

ASIS's MoneySmart website provides practical advice about managing debt. Read their tips on:

Ask about payment plans

Many businesses offer payment plans to help you pay off your debt without increasing it. MoneySmart’s approach to trouble with debt can help you better manage your debt issues for things like utility bills and credit cards.

Overdrawn bank accounts

An overdrawn bank account is when more money is taken out than you have. This may lead to a debt or fees you have to pay.

We have an agreement with many financial institutions including major banks, building societies and credit unions to protect you from having to pay too much at one time if you overdraw your account.

The Code of Operation agreement sets out how much your financial institution can take from the money that goes into your account. This makes sure you have enough money left over to cover essential living costs such as food and rent.


If you get a pension payment of $200 a fortnight, the Code of Operation says you should get at least $180, or 90%, of your payment.

This means your financial institution should only take up to $20 to repay any overdrawn amount, including fees.

You’ll need to talk to your financial institution to see how they can help you manage an overdrawn account.

Read more about what to do if your account is overdrawn.

Overdrawn accounts after 60 days

If you don’t make arrangements to pay your debt, financial institutions may take action seeking payments for overdrawn amounts or debts. After 60 days they could:

  • report your debt to a credit reporting body, which could affect your credit rating, or
  • take legal action against you for the amount you owe

You can avoid getting a Centrelink debt by keeping us up to date with your income and any changes in your circumstances.

If you owe us money, we have arrangements in place to repay a Centrelink debt. Read more about owing money to us and the options you have.

Avoiding debt

There are things you can do to avoid debt. You can:

  • start a budget to track your spending, it can help identify the things you can afford, and
  • find out whether you can reduce your bank, building societies and credit unions account fees

If you get one of our payments or have a concession card, you may be eligible for a fee free account with your financial institution.

If your situation changes, use this time to check your banking arrangements are right for you. Find out which Australian banks offer basic bank accounts on the Australian Bankers' Association website. Before making changes, make sure they will meet your needs.

Find out more about loans, debt services or getting credit before you make a purchase.

Read MoneySmart advice about:

Professional help

Getting out of debt or financial hardship may take some time. You may find it useful to talk with a financial counsellor, and in some cases, you may need to seek legal help.

Financial counselling

Financial counsellors provide a free, confidential and independent service. They can suggest ways to improve your financial situation, negotiate repayment options and can refer you to other services such as a gambling helpline, personal counselling or community legal aid.

Financial counsellors can provide advice about:

  • repaying debts
  • debt collectors
  • debt recovery through the courts
  • house eviction, disconnection of utilities such as gas, electricity or phone
  • uninsured car accidents
  • tax debts, and
  • unpaid fines

There are counsellors near you that are provided by community organisations and community legal centres. You can find a financial counsellor on the Financial Counselling Australia website.

The Department of Agriculture and Water Resources Rural Financial Counselling Service supports primary producers, those in the fishing industry and small rural businesses that are suffering financial hardship.

Read more about the Rural Financial Counselling Service on the Department of Agriculture and Water Resources website.

Legal help

If your debt becomes unmanageable you may receive a court order, summons, statement of claim or liquidation claim. You must take these legal notices seriously. Do not ignore the notice or you may get a judgement against you. This may mean that your goods could be sold to settle your debt.

Read about where you can get free legal advice on the MoneySmart website.

Page last updated: 29 August 2018