Legal Q&A: Debt Relief
Willy Pleasance
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Legal Corner
I am a first-time inmate in a Victorian prison and I am trying to obtain some accurate information with regards to my debts. These consist of credit cards, a mobile plan and a couple of hire purchase contracts. I am aware that outstanding fines can be offset or wiped by time incarcerated, so I am wondering if there is any provision to do the same for other debts?
Even if it were only to the extent of avoiding the seemingly endless accrual of “late payment fees” and “penalty interest charges”.
I am certain any clues you can offer will be greatly appreciated by not only myself but lots of guys and gals who have found themselves in a similar situation.
Gazza
P.S. keep up the great work guys. I really look forward to each issue of About Time.
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Response From Financial Counselling Victoria:
It’s a positive step to seek information about your debts while in custody – well done on reaching out early!
It’s true that, if you are serving a prison sentence, you can apply for some fines that are registered with Fines Victoria to be converted to run concurrently with your existing sentence. An application to convert the eligible fines should be available through the prison.
This arrangement doesn’t apply to private debts such as credit cards, mobile phone contracts or hire purchase agreements. These debts remain active while you’re in custody and may continue to incur interest and late payment fees if not managed.
There are protections available. Under the National Consumer Credit Protection Act 2009 (Cth) and the ASIC Act 2001 (Cth), you have the right to request financial hardship assistance from your creditors. This means you can ask them to pause payments, stop interest and fees, restructure your repayments, extend loan terms or other actions that meet your hardship situation while you’re in prison. The Banking Code of Practice also now recognises incarceration as a reason for hardship, and banks are required to provide extra care for these customers. Lenders and credit providers should have hardship departments and are required to consider reasonable requests, responding to your request within 21 days.
You, or a recognised consumer advocate like a financial counsellor, need to proactively ask for this hardship support from your creditors. Unfortunately, while we understand there is no financial counselling service available at Ravenhall, Inside Access through the Mental Health Legal Centre can assist with non-criminal legal matters at the facility, and this includes fines. Reintegration officers may also be able to help you make contact with creditors and explain your situation. If possible in your circumstances, you can also call the National Debt Helpline on 1800 007 007 for financial counselling help over the phone.
When you do this, you could consider whether any of these debts are statute-barred – this means that no payments have been made on the debt for 6 years, and you have not admitted in writing that you owe the money during that time, and the creditor has not started legal action in that time. In these cases, you still legally owe the money, but the creditor can’t use the court to make you pay it.
Don’t wait too long – the sooner you act, the more options you may have to stop the debt from growing.
By Financial Counselling Victoria
Response From Financial Counselling Victoria:
It’s a positive step to seek information about your debts while in custody – well done on reaching out early!
It’s true that, if you are serving a prison sentence, you can apply for some fines that are registered with Fines Victoria to be converted to run concurrently with your existing sentence. An application to convert the eligible fines should be available through the prison.
This arrangement doesn’t apply to private debts such as credit cards, mobile phone contracts or hire purchase agreements. These debts remain active while you’re in custody and may continue to incur interest and late payment fees if not managed.
There are protections available. Under the National Consumer Credit Protection Act 2009 (Cth) and the ASIC Act 2001 (Cth), you have the right to request financial hardship assistance from your creditors. This means you can ask them to pause payments, stop interest and fees, restructure your repayments, extend loan terms or other actions that meet your hardship situation while you’re in prison. The Banking Code of Practice also now recognises incarceration as a reason for hardship, and banks are required to provide extra care for these customers. Lenders and credit providers should have hardship departments and are required to consider reasonable requests, responding to your request within 21 days.
You, or a recognised consumer advocate like a financial counsellor, need to proactively ask for this hardship support from your creditors. Unfortunately, while we understand there is no financial counselling service available at Ravenhall, Inside Access through the Mental Health Legal Centre can assist with non-criminal legal matters at the facility, and this includes fines. Reintegration officers may also be able to help you make contact with creditors and explain your situation. If possible in your circumstances, you can also call the National Debt Helpline on 1800 007 007 for financial counselling help over the phone.
When you do this, you could consider whether any of these debts are statute-barred – this means that no payments have been made on the debt for 6 years, and you have not admitted in writing that you owe the money during that time, and the creditor has not started legal action in that time. In these cases, you still legally owe the money, but the creditor can’t use the court to make you pay it.
Don’t wait too long – the sooner you act, the more options you may have to stop the debt from growing.
By Financial Counselling Victoria
Date Published
August 7, 2025
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