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What is temporary debt protection?
If you’re in financial difficulty, a temporary debt protection (TPD), gives you a 21-day protection period where unsecured creditors can’t take enforcement action, such as a sheriff seizing your goods or garnishing your wages.
If you want to apply for bankruptcy, you do not need to apply for temporary debt protection first.
Important information
Applying for temporary debt protection, (also known as a Declaration of intention to present a debtor’s petition), is considered an act of bankruptcy.
This means it could potentially be used by a creditor to make you bankrupt, so make sure you get advice from a financial counsellor first to make sure it’s right for you.
Before you apply for temporary debt protection
Speak to a financial counsellor to understand the consequences
It’s important to speak to a financial counsellor before you apply for temporary debt protection. They can provide advice about your financial situation and recommend the best option for you to deal with unmanageable debt.
To speak with a free financial counsellor, contact the National Debt Helpline online or call 1800 007 007.
For more information on financial counsellors and other support services see Where to find help managing debts.
What happens when you apply for temporary debt protection?
You receive a 21 day protection period
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:
- 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 are right for you and gather the information needed for apply.
Once your temporary debt protection is accepted, you cannot apply for temporary debt protection again for 12 months.
What a temporary debt protection will not do
Doesn’t stop secured creditors
Secured creditors can still repossess any assets they hold a security over (such as a house under mortgage) if you can’t make repayments.
Doesn’t cover all debts
Temporary debt protection does not apply to some types of debt. These include child support, HELP debts, and fines imposed by a court.
Doesn’t prevent creditors from seeking payments
Temporary debt protection doesn’t stop your creditors from contacting you to seek payment for your debts. Creditors can also take – or continue – legal action to recover the debt.
Consequences of temporary debt protection
It's a serious step to apply for temporary debt protection, which is also known as a Declaration of intention to present a debtor’s petition. It’s important to understand how the consequences will impact you if you proceed.
Creditors can use it to make you bankrupt
Temporary debt protection is an ‘act of bankruptcy’. This means a creditor could use the fact you have lodged a temporary debt protection as the basis for an application to the court to make you bankrupt.
It doesn’t stop your creditors from lodging a creditor’s petition with the court to make you bankrupt.
If you need to appear in court and are unsure if you should attend, contact the court. For more information about legal assistance see Seek legal assistance.
It is not recorded on the public register of personal insolvencies
The details of your temporary debt protection do not appear on the National Personal Insolvency Index (NPII).
Who can apply for temporary debt protection (TDP)
You can apply for temporary debt protection if you have debts you can’t pay. Usually people apply for temporary debt protection if unsecured creditors are taking enforcement action.
Some people are not eligible for temporary debt protection. This includes people who:
- have had a temporary debt protection 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.
What happens when you enter a temporary debt protection?
If you lodge a temporary debt protection application, your 21-day protection period starts from when we accept your application.
When we accept your temporary debt protection application, your creditors are:
- notified by us of the 21-day protection period and given a copy of your financial affairs.
- unable to enforce recovery of unsecured debts for 21 days - this includes garnishing of wages and seizing property.
- able to start or continue legal action but can't take enforcement action to recover the debt.
- able to continue recovery for a secured debt e.g. house or car.
After 21 days you are not automatically bankrupt, and creditors can again resume trying to recover their debts.
How do I apply for temporary debt protection?
Once you have spoken with a financial counsellor to understand the consequences of proceeding with temporary debt protection, you can apply by lodging a temporary debt protection form.