Debt can feel like quicksand. The more you struggle, the deeper you sink — with mounting interest, letters from creditors, and sleepless nights.
We’ve worked with clients all over Canberra dealing with everything from unpaid credit cards and tax debt to business insolvency and loan defaults. And while we’re a law firm, we don’t believe in scare tactics or charging for advice you could’ve gotten from Google.
So, here it is: ten practical, lesser-known tips for getting out of debt — the kind you won’t always hear from other lawyers (or debt collectors).
1. You don’t need to panic — but you do need a plan.
Debt is stressful, but panic leads to poor decisions. We’ve seen clients rush into bankruptcy, refinance their homes at crazy rates, or ignore court letters because they didn’t know what else to do.
Pro tip: Take a breath. Write down all your debts, your income, and what you own. Clarity is step one — even if the numbers look bad.
2. Creditors would rather negotiate than go to court.
Most people assume the moment you miss a payment, your creditor will send the legal hounds. But here’s the truth: most creditors (banks, suppliers, even the ATO) don’t want a court battle. It costs them time and money, too.
Pro tip: A well-worded letter offering a payment plan or compromise can go a long way — especially if it shows you’re serious and acting in good faith.
3. Debt collectors have rules. Learn them.
If someone’s calling you at all hours, threatening legal action or demanding payment in full — they might be breaking the law. Debt collectors in Australia must follow the ACCC and ASIC guidelines.
Pro tip: You have the right to ask them to stop calling, communicate in writing only, or to provide proof of the debt. Use it.
4. Your credit score isn’t ruined forever.
We’ve had Canberra clients who assumed a single missed payment or default meant they’d never get credit again. Not true.
Pro tip: Defaults drop off after 5 years, and repayment plans or negotiated settlements can actually improve your credit profile over time.
5. The ATO is more flexible than you think.
Tax debt is scary. But the ATO is one of the most willing institutions to negotiate. They offer payment plans, remission of interest and penalties, and even hardship assistance — if you ask.
Pro tip: Don’t wait until the ATO serves you a Director Penalty Notice. Engage early. You’ll have more options.
6. Bankruptcy is not your only option — and it might not be the best one.
Yes, bankruptcy wipes most unsecured debt. But it also impacts your job options, credit access, and business activities for years. And it doesn’t clear all debts (like HECS or child support).
Pro tip: Consider options like a Part IX Debt Agreement or informal negotiations before jumping into bankruptcy. These can be less damaging and more manageable.
7. For small business owners: separate your personal and business debt.
We’ve worked with Canberra tradies, sole traders, and shop owners who used personal credit cards to float their business. That blurs the lines — and can make it harder to get help.
Pro tip: Get clear about which debts are business and which are personal. Then look into small business restructuring plans (SBRPs) — a newer, cheaper alternative to liquidation.
8. You can settle debts for less than you owe — and still sleep at night.
It’s called a “deed of release” or “settlement agreement” — where you offer a lump sum (less than the total debt) in exchange for full release. Creditors often accept, especially if the alternative is chasing you through the courts.
Pro tip: This works best with older debts, or when you can show genuine hardship. A lawyer can help you negotiate it properly, without making promises you can’t keep.
9. Legal advice doesn’t have to be expensive.
Some lawyers charge a fortune to write a three-sentence letter. Others bundle you into expensive insolvency packages you don’t need. We think that’s unfair — especially when you’re already under financial stress.
Pro tip: Look for fixed-fee advice or initial strategy sessions (many lawyers, us included, offer these). You might only need one or two hours of guidance to avoid a much bigger mistake.
10. The sooner you act, the more choices you’ll have.
The longer you leave it — especially if legal proceedings begin — the narrower your options. Deadlines for filing defences, setting aside judgments, or negotiating settlements are real.
Pro tip: Even if you’re not sure what to do yet, don’t ignore those letters. Every day counts.
Bonus: Canberra has support services — use them.
From Care Financial Counselling to the Consumer Law Centre ACT, there are organisations offering free, confidential help to people in debt.
Pro tip: A financial counsellor can help you understand your options. A good lawyer can help you act on them. Use both.
In Summary: There’s a way forward. Let’s find it.
If you’re feeling overwhelmed by debt, we get it. It’s scary. It’s personal. But it’s not permanent. The law offers pathways out — and with the right plan, you can take back control.
Here’s a quick recap of the ten lesser-known debt tips:
- Act early to keep your options open
- Panic doesn’t help — a plan does
- Creditors often prefer negotiation
- Debt collectors have rules
- Credit scores recover
- The ATO can be flexible
- Bankruptcy is one option — not the only one
- Separate business and personal debts
- Settlement is possible
- Legal advice doesn’t have to cost a fortune
- Act early to keep your options early
