What is temporary debt protection (TDP)?

If you need time to consider what your next step will be, temporary debt protection (TDP) may suit you.

What happens when you apply for temporary debt protection?

You receive protection

  • It provides a six month protection period where unsecured creditors (including sheriffs) can’t take further action to recover their debts. 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?

Note: If you are having difficulty with your taxation or superannuation obligations, including debts, you should seek advice from the Australian Taxation Office. They offer a range of support mechanisms. Read more at ato.gov.au/coronavirus

It is not recorded on the public register of personal bankruptcies

  • The details of your TDP do not appear on the permanent National Personal Insolvency Index (NPII)[?].

You are not made bankrupt

  • It doesn't automatically make you bankrupt. After six months, if you do not apply for bankruptcy, creditors can continue to pursue you for the debts.

Some goods can still be repossessed

  • It doesn't stop a creditor from repossessing goods for a secured debt (for example a car or house), if you can’t make repayments.

Creditors can use it to bankrupt you

  • A creditor could use the fact you have lodged a TDP as the basis for an application to the court to make you bankrupt.

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.

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