PAYDAY LOANS

Page last updated on 01/06/2020

More information

What do the changes mean?


  • The approach with payday loans still must be to first check for irresponsible lending as this is a common problem
  • You can negotiate a repayment arrangement or debt reduction as part of negotiating financial hardship
  • It should be easier to get interest stopped and fees waived
  • Waivers or reductions in debt should be available for people in significant long-term financial hardship
  • Stimulus payments and the coronavirus supplement should mean that some people can settle the payday loan debt for a reduced amount as a full and final settlement offer
  • You need to consider immediately cancelling the direct debit for any repayment arrangement your client can no longer afford. Talk to the payday lender about different methods for making payments
  • Payday loans are a very low priority debt




What do you do differently?


  • You should carefully check the lending for any payday loans provided during the pandemic. It may be irresponsible. Particularly look for loans provided just after certain industries shut down
  • Do inform the payday lender if your client has been financially impacted by the pandemic
  • Do let the payday lender know if your client is receiving JobSeeker or JobKeeper payments.
  • Take extra care to avoid deferring payments where interest and fees are still being charged
  • Do check on their website if the payday lender is offering any specific assistance
  • Make sure you consider the following issues in your negotiations:
    • Late fees and default/legal fees not to be charged
    • Interest not to be charged
    • Repayments must be affordable
    • Where your client is in significant medium- to long-term financial hardship, a waiver or part waiver may be considered
    • Negotiate a debt reduction in full and final settlement if the client has funds and the settlement would help financial stability
    • Ask for all enforcement to stop and that the lender contact you before they start/re-start enforcement action.




What has not changed?


  • You should always check if the lending for the payday loan was irresponsible and run a dispute if it was
  • Payday loans in default can still be sent to a debt collection agency
  • Payday lenders can start legal proceedings to seek a court judgment for the debt (if it is in default)





Disclaimer: The information on this website is for financial counsellors only. It is general information only. Financial counsellors must still tailor advice to their client’s individual circumstances. 

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FCA sincerely thanks Kat Lane. Liz Minter and Melinda Rene for their outstanding work in putting this site together.