When your lender agrees to waive your debt
This explanation applies to you if:
-
Your lender has agreed to waive your debt because you're unlikely to be able to pay it due to financial hardship.
The waiver might be subject to you paying a portion of the debt first.
Summary:
- Once waived, the debt is closed on your credit report.
- No default will be recorded (if it hasn’t already been reported), and the debt will not be sold to a debt collector.
- A debt waiver is a type of financial hardship arrangement. It appears on your credit report for 12 months.
What is a debt waiver?
If you experience a serious hardship (like a natural disaster, an illness, or a relationship breakdown) that makes it unlikely you will ever be able to repay your debt, a lender may agree to a ‘debt waiver’.
A debt waiver is when your lender agrees that:
- You no longer owe the debt, and
- You are no longer required to make repayments for that debt.
This agreement may cover the entire debt or may be subject to you paying a portion of the debt first, depending on your arrangement with the lender.
How does a debt waiver affect your credit report?
Once your lender waives the debt, no further missed payments will be recorded in your repayment history, and the loan will be closed on your credit report.
If a default has not yet been recorded, none will be added once the debt is waived.
If a default has already been recorded, it will be updated to show it has been paid.
Defaults stay on your credit report for five years, even if paid. Avoiding defaults where possible can help support your long-term financial recovery.
What is a credit report?
A credit report is a record of your credit history. It includes:
- personal information to identify you,
- information about loans and other credit you have opened or applied for,
- a month-by-month repayment history,
- financial hardship information if you've agreed to a financial hardship arrangement.
What is “financial hardship information"?
A debt waiver is recorded on your credit report as financial hardship information.
If your lender agrees to waive the debt in full, your report will show a permanent change 
and the loan will be closed.
If you’re required to make a partial repayment before the waiver takes effect, a temporary arrangement 
may appear on your report during that time. Once the repayment is made and the remaining debt is waived, the permanent will be shown.
Financial hardship information stays on your credit report for 12 months. After that time, it’s no longer possible to tell from the credit report that any financial hardship arrangement was in place, or that the debt was waived.
What is repayment history?
A repayment history is a 24 month view of how you manage and pay your loan and credit accounts:
or 
means you are up-to-date with repayments (and mean the same thing)
to 
indicates how many months your repayments have been overdue
means repayments are 7 or more months overdue
A good repayment history can help when you apply for credit in the future.
If you've missed a repayment, restarting your payments and getting back up to date as soon as you can will help improve your credit report. Repayment history stays on your credit report for 24 months.
EXAMPLE 1
Len’s small shop went out of business in 2022, and by July 2023 he is three credit card payments behind, with a balance of $6,000.
In August, his lender agrees to accept $2,000 as full settlement of the debt, to be paid by October when Len expects a tax return. The lender treats the gap between August and October as a temporary financial hardship arrangement , and does not expect any payments until October.
As long as Len makes the agreed $2,000 payment in October, the lender waives the remaining $4,000. His repayment history then shows 
with a to reflect the permanent variation, and the account is closed. No further information will appear on his credit report. After 12 months, the financial hardship arrangement information disappears, leaving only that the loan was closed and Len was up-to-date.
If you’re struggling to make a payment
If you need to make a payment before a debt can be waived, but think you’ll have trouble meeting it, contact your lender as soon as possible.
If the payment is missed and no new arrangement is in place, those missed payments may appear on your credit report and make your account look significantly overdue. Staying in touch with your lender early can help you avoid this and protect your credit report.
Will I be able to apply for credit in the future?
A debt waiver can help protect your credit report because no further missed payments will be recorded. It can also help you avoid a default being reported (which can make it harder to get credit for up to five years).
Whether you can or should take on new credit will depend on your financial situation and ability to make repayments. You may need to wait until your circumstances improve.
Be cautious of lenders offering ‘easy’ or short-term credit, such as payday loans. These can be expensive, and lenders may not properly check whether you can afford the repayments. Taking on more credit before you’re ready could add further negative information to your report and slow down your financial recovery.
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