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What happens when you apply for temporary debt protection?
You receive protection
Once we accept your application, temporary debt protection provides a 21 day protection period in which unsecured creditors (including sheriffs) can’t take enforcement action to recover money you owe them. This means they can’t garnish your wages or have the sheriff/bailiff seize your goods.
You can use this time to:
- seek advice from a free financial counsellor – see Where to find help
- negotiate a payment plan with your creditors. You can do this yourself or authorise someone else to negotiate on your behalf
- consider if any of the formal insolvency options would be right for you – see What are my options?
Once your TDP is accepted, you cannot apply for temporary debt protection again for 12 months.
Some goods can still be repossessed
- Secured creditors can still repossess any assets they hold a security over (such as a house under mortgage), if you can’t make repayments.
Some debts are not covered
- Temporary debt protection does not apply to some types of debt. These include child support, HELP debts, and fines imposed by a court.
Creditors can use it to bankrupt you
- It doesn’t stop your creditors from lodging a creditor’s petition with the court to make you bankrupt.
- TDP is an ‘act of bankruptcy’. This means a creditor could use the fact you have lodged a TDP as the basis for an application to the court to make you bankrupt.
Creditors can still take some actions
- Your creditors can still contact you to seek payment
- They can take – or continue – legal action to recover the debt
You are not made bankrupt
- It doesn't automatically make you bankrupt. After 21 days, if you do not apply for bankruptcy, creditors can continue to pursue you for the debts.
It is not recorded on the public register of personal bankruptcies
- The details of your TDP do not appear on the National Personal Insolvency Index (NPII).
Who can apply for temporary debt protection (TDP)
You can apply for TDP if you have debts you can’t pay. Usually people apply for TDP if unsecured creditors are taking enforcement action.
Some people are not eligible for TDP. This includes people who:
- have had a TDP accepted in the last 12 months
- are currently in an active debt agreement or personal insolvency agreement
- have been served with a Creditor’s Petition that has been filed in the court.
How do I apply for temporary debt protection?
If you understand the consequences of proceeding with temporary debt protection and think this is the right option for you, you can apply by lodging a temporary debt protection form.