Hardship Arrangement Template
A hardship arrangement gives a customer in genuine difficulty a realistic, compassionate way to pay — protecting the relationship and your prospects of recovery.
What's included
- Understand when a hardship arrangement is appropriate
- Record a realistic, temporary plan in writing
- Keep an acknowledgement of the balance owing
- Balance compassion with protecting your position
- Know when to seek advice
7 min read
The template
This general template records a temporary, good-faith arrangement where a customer is in genuine difficulty. Replace each [placeholder].
HARDSHIP ARRANGEMENT Parties: [Creditor] ABN [ABN] and [Customer] ABN/ACN [number] Date: [date] 1. Background The Customer has told us they are experiencing genuine financial difficulty. We have agreed a temporary arrangement to help them keep paying down what they owe. 2. Amount owing The Customer acknowledges [$amount] is owing in respect of [invoice numbers], and that it is not in dispute. 3. Temporary arrangement For the period [start] to [review date], the Customer will pay reduced instalments of [$amount] on [dates], to [BSB/account], reference [reference]. 4. Review We will review the arrangement on [date]. The unpaid balance remains owing. 5. Interest / costs [Optional — interest and recovery costs are paused during the arrangement / continue per the terms.] 6. If circumstances change The Customer will tell us promptly if their situation changes. Signed: ______________ (Creditor) ______________ (Customer)
Compassion that still protects you
Where a customer's difficulty is genuine, a temporary, realistic arrangement is often both the decent and the commercially sensible response — pushing too hard can tip a recoverable account into a bad debt or insolvency, where you may get little. The key is to be flexible on the timing without giving up the debt itself: keep the acknowledgement that the full balance is owing, set a clear review date, and treat the reduced payments as temporary relief rather than a permanent write-down.
How to use it
Use it when the hardship is real and the customer is engaging in good faith — not as a default option for every slow payer. Set instalments they can genuinely meet, fix a review date so the arrangement does not drift indefinitely, and decide up front whether interest pauses. Keep the signed arrangement and any supporting information on file. If the situation deteriorates beyond what an arrangement can fix, you can still refer the debt. For a standard, non-hardship catch-up, the repayment plan agreement is the better starting point.
Not legal advice
This is a general template and general information only — not legal advice. How to handle a customer in hardship, and how an arrangement should be worded, depends on your circumstances and any obligations that apply to you. Have it reviewed by a lawyer before you rely on it.
Tips
- Hardship arrangements suit customers in genuine difficulty.
- Be flexible on timing without giving up the debt.
- Keep an acknowledgement and a clear review date.
- Pushing too hard can turn a recoverable account into a loss.
FAQ
Should I write off part of the debt for hardship?
Not necessarily. A hardship arrangement usually adjusts timing while preserving the full balance. A write-down is a separate commercial decision. This is general information, not legal advice.
How long should a hardship arrangement run?
Keep it temporary with a fixed review date, so it does not drift. Extend deliberately if the difficulty continues.
What if the customer stops engaging?
If good-faith engagement breaks down, you can treat the balance as owing and consider recovery. Document what happened along the way.
Templates are a head start — not legal advice
Customise to your business and have important documents reviewed. Need to recover a debt? We can help.