Financial Rights Legal Centre
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Call our National Debt Helpline
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I can’t pay my phone debt (factsheet)

This fact sheet is for information only. It is recommended that you get legal advice about your situation.

Download our printer friendly version here (PDF): Can’t Pay Phone Debt 

CASE STUDY

Sam was very excited when he bought an iphone. He bought it to celebrate getting his first job after finishing school last year. The phone was totally awesome. He got a great deal with a plan. He downloaded lots of apps.

Now Sam has lost his job. He cannot afford the monthly repayments on the phone. He was hoping to get another job soon but it has been 3 months and still nothing. Now BIG TELEPHONE COMPANY is threatening to cancel the contract and charge an enormous cancellation fee.

PREVENTING PHONE DEBT

Phone debt can be a real problem. The best cure for phone debt is prevention! So if you:

  • Change jobs a lot
  • Are currently unemployed
  • Your job is not secure
  • Are on a low income or
  • Have heaps of debts

You should think about:

  • Pre-paid mobile phones
  • An in-contact service (if you are on a very low income) for your home phone
  • Shopping around for a capped plan for home phone and internet.

OK I HAVE A DEBT I CAN’T PAY, WHAT NOW?

Step 1: Do you think you owe the debt in full? If yes proceed to Step 2. If no you need to:

  1. Get advice. If you think you have been wrongly charged under your contract, that your contract is essentially unfair, or the phone company or salesperson has misled or otherwise taken advantage of you, you need to get legal advice. There are consumer laws which deal with misleading and deceptive conduct, unconscionable conduct and (from 1 July 2010) unfair terms. Contact the National Debt Hotline on 1800 007 007.
  2. Raise a dispute with the phone company.
  3. If the dispute remains unresolved contact the Telecommunications Industry Ombudsman (TIO) (www.tio.com.au 1800 062 058).

Step 2: Work out what you can afford to pay to the debt on a regular basis (say fortnightly). Start paying this amount in reduction of the debt. The reason you do this is because at least while you are negotiating the debt is reducing.

Step 3: Contact the phone company and tell them:

  1. You are in financial hardship;
  2. How much you can afford to pay;
  3. Ask for a repayment arrangement on the basis you will pay the amount you can afford each fortnight or month. Keep a note of the details of the phone conversation. If possible, use the sample letter attached to confirm the agreement and keep a copy of the letter.

Telecommunications companies (telcos) must have processes in place to reasonably consider repayment arrangements on the grounds of financial hardship.

REMEMBER: THE AIM IS TO GET AN AGREED REPAYMENT ARRANGEMENT IN PLACE THAT YOU CAN AFFORD!

Step 4: If you do not get an agreed repayment arrangement in place (meaning they have agreed to stop all action and let you pay off the debt with the amount that you can afford   each month or fortnight) then ring the TIO. Tell the TIO you have a dispute with the phone company that remains unresolved. The TIO will give you another phone number for a more senior person to try.

Step 5: Ring the phone company again. If they still do not agree to a repayment arrangement then immediately take the next step.

Step 6: Go online or send a complaint in writing to the TIO. You can complain that the Telco failed to reasonably consider your request for a repayment arrangement.

Step 7: Persist at the TIO. Don’t give up. Send an email, or call the TIO if you don’t hear anything for any more than 21 days. Get advice if you are not getting anywhere. Continue to make the repayments that you can afford.

DO I HAVE ANY HARDSHIP RIGHTS WITH THE PHONE COMPANY?

You do have rights to request repayment arrangements on the grounds of financial hardship. There are two relevant statements that assist:

  • The TIO Position Statement – Hardship and Payment Difficulties available at tio.com.au
  • Telecommunications Consumer Protections Code (Chapter 6.11) available at www.tio.com.au

Both of these documents cannot be enforced in Court but are taken into account by the TIO when it is making a decision. The Position Statement and Code require the phone company to work with you to make a repayment arrangement when you are in financial hardship. As a result this can really help to get the phone company to agree to an arrangement.

IMPORTANT:  If you are still having trouble getting a repayment arrangement through the TIO, get advice!

Contact the National Debt Hotline on 1800 007 007.

NEED SOME MORE HELP?

See Fact Sheet: Getting Help for a list of additional resources.

Last Updated: February 2017