Prioritising debt

The consequences of failing to pay your debts are far-reaching and may affect your future.


What are the consequences of not paying your debts?


Apart from the anxiety you may experience, debt may have dramatic real-world consequences. These may include:

  • You could be evicted from your home if you cannot pay your rent or mortgage.

  • If you do not pay your rent you may be listed on TICA, Australia’s largest tenancy database. This will make it harder for you to have a future rental application accepted.

  • You may be placed on a default list if your mortgage lapses or any other debts remain unpaid. This could affect your future borrowing opportunities.

  • Legal action may be taken. This could lead to loss of property, bankruptcy and legal seizure of your wages.

  • Your electricity, phone and internet may be disconnected.

  • Your debt may be sold to debt collection agencies where it may continue to grow.

Fortunately, there are things you can do to help you get on top of your debts.


Prioritising your debts

The first step towards financial freedom is getting on top of your debts. To do this, prioritise the ones that need urgent attention. Of course, we all see debts differently and have different ideas about what’s most important. The examples listed below will help you decide what you should attend to first.


Deciding what to pay first

To get on top of your debts, gather the bills together and separate them into two piles. Put your most urgent debts into a pile called ‘Priority’ and put your less urgent ones into a ‘Non-priority’ pile.


Priority bills are those where non-payment will have serious consequences. For instance, if you don’t pay your rent you may be evicted from your home, or if you don't pay your electricity bill your home may be without power.


Non-priority bills are still important but you may simply incur a late fee, or have your service suspended if you cannot pay on time. You may like to consider cancelling or postponing non-essential services until your situation improves.


What options exist to help you pay priority debts?

Unless creditors know about your situation, they can’t help. So, contact them as soon as possible and explain your situation. They are legally obliged to consider your request for leniency due to financial hardship.


Remember, it’s very important to work out a budget that allows you to pay for your most essential services, such as rent, electricity and food. If you’re unsure where to start, read our helpful guide on creating a budget or call the National Debt Helpline on 1800 007 007. A financial counsellor can help you create a budget for free.


Electricity is an essential service that most households rely on daily. To help you keep the lights on, you can apply for a Home Energy Emergency Assistance Scheme grant. The Scheme can help by paying a portion of your energy bill.

How to prevent your debts from escalating

Live within your budget
By not overspending, you’ll quickly chip away at your debt.
Contact the creditor
Contact the creditor as soon as you are aware you cannot pay, with the aim of setting up a reduced payment amount for as long as you will need it.
Talk with a financial counsellor
They will explain the process and the timing of the court proceedings.

Additional information

women meeting with finance councillor
Looking for guidance?
Contact us today to organise a meeting with one of our financial counsellors.

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