Can Government Fines Be Included in a Debt Agreement? What Australians Need to Know

Introduction

When financial pressure starts building, it rarely comes from just one source. Many Australians find themselves juggling credit cards, personal loans, Buy Now Pay Later (BNPL) repayments, utility bills and, in some cases, outstanding government fines. As the cost of living continues to affect households across the country, it’s understandable that people begin looking for ways to simplify their financial obligations.

One question that frequently arises is whether government fines can be included in a Debt Agreement under Part IX of the Bankruptcy Act 1966. It’s an important question, but unfortunately, there is also a great deal of misinformation online.

Some websites suggest that a Debt Agreement can simply “roll all debts into one payment,” including government fines. That is generally not correct and may create unrealistic expectations for people already experiencing financial hardship.

This guide explains how Debt Agreements work, which debts are generally eligible, why government fines are treated differently under Australian law, and what options may still be available if you’re managing both fine debt and other unsecured debts.

Our goal is to provide clear, factual information so you can make informed financial decisions based on your individual circumstances.

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Can Government Fines Be Included in a Debt Agreement?

Short Answer

Generally, no.

Most government fines, including many court-imposed fines and state-issued infringement penalties, are generally not included in a Part IX Debt Agreement. This means you usually remain responsible for paying those fines separately, even if you enter into a Debt Agreement for other eligible unsecured debts.

This position is reflected in guidance published by the Australian Financial Security Authority (AFSA), which explains that many government-imposed penalties are not provable debts under Australia’s personal insolvency legislation.

That does not necessarily mean you have no options. Many Australian states and territories offer repayment plans or financial hardship assistance for eligible individuals who are struggling to pay government fines.

Understanding the distinction between eligible unsecured debts and government penalties is essential before making decisions about your financial future.

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What Is a Debt Agreement?

A Debt Agreement is a formal insolvency arrangement available under Part IX of the Bankruptcy Act 1966 for eligible individuals who cannot repay all of their unsecured debts in full.

Rather than declaring bankruptcy, eligible individuals may propose a structured repayment arrangement that is assessed according to legislative requirements. Creditors vote on the proposal, and if the required majority accepts it, the agreement becomes legally binding on participating creditors.

Unlike a personal loan or refinancing product, a Debt Agreement is a formal legal process governed by Australian insolvency legislation.

Its purpose is to provide a structured way of dealing with eligible unsecured debts based on an individual’s financial capacity.

Importantly, entering into a Debt Agreement does not automatically affect every financial obligation you owe. Some liabilities remain outside the agreement because Australian legislation specifically excludes them.

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Which Debts Can Generally Be Included?

Many unsecured consumer debts may be eligible for inclusion in a Debt Agreement, depending on individual circumstances.

Examples commonly include:

• Credit card balances
• Personal loans
• Store finance
• Buy Now Pay Later (BNPL) debts
• Unsecured lines of credit
• Certain medical debts
• Some unsecured utility arrears

These are generally considered unsecured consumer debts because they arise from contractual lending or credit arrangements.

Once accepted into a Debt Agreement, participating creditors are bound by the agreed repayment structure.

However, not every debt fits into this category.

Australian insolvency legislation distinguishes between consumer credit obligations and certain government-imposed liabilities.

This distinction is where many misunderstandings occur.

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Why Are Government Fines Usually Excluded?

Government fines are fundamentally different from consumer debts.

A credit card debt exists because a lender extended credit under a contractual agreement.

A government fine exists because legislation authorises a government authority or court to impose a financial penalty following a legal process.

Because of this legal distinction, many government fines are generally not provable debts under Australian insolvency law.

As a result, they are typically excluded from Debt Agreements.

This means that even if your eligible unsecured debts are managed through a Debt Agreement, you usually remain responsible for paying outstanding government fines separately.

The purpose of this approach is to preserve the enforcement of penalties imposed under Australian law rather than treating them like ordinary consumer borrowing.

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What Types of Government Fines Are We Talking About?

Many Australians use the word “fine” broadly, but there are several different categories of government-imposed penalties.

These may include:

Traffic infringement notices issued by state authorities.

Court-imposed monetary penalties following legal proceedings.

Public transport infringement notices.

Local council penalties.

Parking infringements administered under local government legislation.

Environmental or regulatory fines.

While the legislation governing each type of fine varies between states and territories, they generally share one important characteristic—they arise through statutory enforcement rather than consumer lending.

That legal difference is why they are commonly treated separately from unsecured debts under insolvency legislation.

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Why This Distinction Matters?

Believing that every debt can simply be included in a Debt Agreement may delay someone from seeking the most appropriate assistance.

For example, a person may have:

• $35,000 in credit card debt
• $12,000 in personal loans
• $4,000 in BNPL balances
• $2,500 in outstanding government fines

The unsecured consumer debts may potentially be assessed for a Debt Agreement if the individual meets eligibility requirements.

However, the government fines would generally still require separate management through the issuing authority.

Understanding this distinction allows individuals to develop realistic expectations and avoid unnecessary disappointment later in the assessment process.

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What If You Have Both Government Fines and Other Debts?

This is actually a common situation.

Many Australians experiencing financial hardship are not dealing with a single financial obligation. Instead, they may have a combination of unsecured debts alongside government fines.

Rather than viewing these as one large debt, it is often more helpful to separate them into categories.

Eligible unsecured debts may be assessed under formal insolvency options where appropriate.

Government fines usually need to be managed directly with the relevant state or territory enforcement agency through repayment arrangements or hardship assistance that may be available under local legislation.

Looking at your finances holistically can help identify the most appropriate strategy rather than assuming one solution applies to every debt.

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Why Professional Assessment Matters?

Financial hardship affects every household differently.

Two people with the same total debt may have very different incomes, living expenses, family responsibilities and financial goals.

For this reason, no responsible financial professional should recommend a Debt Agreement solely because someone has multiple debts.

Instead, a proper assessment considers:

Your income.

Your essential living expenses.

The types of debts you owe.

Your divisible property.

Your future financial capacity.

Whether alternative options may be more appropriate.

This individual assessment helps ensure any recommendations are based on your actual circumstances rather than assumptions.

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What Can You Do If Your Government Fines Cannot Be Included?

Finding out that a state fine cannot be included in a Part IX Debt Agreement does not mean you should ignore it or that no assistance is available.

Instead, it means the fine and your eligible unsecured debts may need to be dealt with through different processes.

AFSA’s current debt comparison guidance states that state fines are not included in a Debt Agreement. The creditor can continue to seek payment, and the fine remains payable after the Debt Agreement. By comparison, ordinary unsecured debts such as credit cards, unsecured personal loans, payday loans and certain utility debts can generally be included.

This distinction can be particularly important for someone who is already experiencing financial hardship.

For example, an Australian household might be struggling with credit cards, an unsecured personal loan and several outstanding state fines. A Debt Agreement could potentially be assessed in relation to eligible unsecured debts, subject to the person’s eligibility and creditor acceptance, while the fines would generally need to be managed separately.

The aim should therefore be to understand the complete financial picture rather than expecting one arrangement to resolve every liability.

Repayment Plans for Government Fines

State and territory governments operate their own fines systems, so there is no single Australia-wide repayment process.

Depending on where the fine was issued, options can include payment arrangements, extensions, hardship programs and, for eligible people in some jurisdictions, programs that allow certain activities, treatment or services to contribute towards satisfying fine debt.

In New South Wales, for example, people who cannot pay a fine or overdue fine in full may be able to establish a payment plan. NSW Government guidance says an approved plan can break the amount into smaller weekly or fortnightly instalments. Eligible people may also have access to a Work and Development Order.

Victoria also allows eligible people to request payment by instalments. Fines Victoria says applications may be assessed by reference to factors including the amount outstanding, income, financial status, payment history and hardship. Eligible outstanding fines may also be combined into one fines payment arrangement. Importantly, this is a payment arrangement administered through the fines system—it is not a Part IX Debt Agreement.

Queensland’s State Penalties Enforcement Registry (SPER) similarly provides instalment options in eligible circumstances. Queensland also has Work and Development Orders for some people experiencing hardship, although not every category of SPER debt can be dealt with through such an order.

These examples demonstrate why Australians should check the rules applying to the state or territory responsible for their particular fine.

Financial Hardship Can Change the Available Options

If you cannot afford your fine because of genuine financial hardship, contacting the relevant authority early can be important.

Hardship programs are not identical across Australia, and assistance is not automatic. Authorities may need information about your income, expenses, health, employment situation or other circumstances before determining which options are available.

In NSW, options can extend beyond an ordinary payment plan. Current NSW Government guidance says that some people experiencing serious financial or other hardship may potentially qualify to have an overdue fine written off, subject to eligibility requirements. Payment plans and Work and Development Orders are also available in qualifying circumstances.

Victoria provides payment arrangements and extensions and has additional mechanisms for eligible people, including the Work and Development Permit scheme and Family Violence Scheme.

Queensland’s SPER identifies several circumstances in which hardship assistance may be available, including financial difficulty, illness or injury, homelessness and domestic or family violence.

The important point is to avoid assuming that being unable to pay immediately means there is nothing you can do.

Why You Should Avoid Borrowing Simply to Pay a Fine?

When a government fine becomes overdue, taking out another loan can appear to provide an immediate solution. But replacing an urgent payment problem with new consumer debt may increase overall financial pressure.

Before borrowing, consider what the new repayments would mean for rent or mortgage payments, groceries, utilities and existing credit commitments.

This becomes particularly important when fine debt is only one symptom of broader financial hardship.

If someone is already struggling with several credit cards, unsecured loans or other consumer debts, another credit commitment may make the household budget more difficult to sustain.

A broader financial assessment may provide a clearer understanding of which debts require immediate attention, which hardship programs may be available and whether formal or informal debt options should be considered.

Can a Debt Agreement Still Help If You Have Government Fines?

Potentially—but not by absorbing state fines into the Debt Agreement.

This distinction is essential.

Consider someone with $45,000 of eligible unsecured consumer debt and $3,000 of state fines. If that person satisfies the legislative requirements for a Part IX Debt Agreement, the eligible unsecured debts may potentially be addressed through a proposed Debt Agreement, subject to the statutory process and creditor acceptance.

The state fines would generally remain outside the agreement and would still need to be addressed separately. AFSA’s current comparison table specifically lists state fines as not being included in a Debt Agreement.

The person’s budget therefore needs to account for both arrangements.

A responsible assessment should consider whether the individual can realistically maintain the proposed structured repayments while also meeting essential living expenses and obligations that remain outside the Debt Agreement.

This is one reason a Debt Agreement should never be presented as a universal answer to financial hardship.

Not Every Government Debt Is Treated the Same Way

Another misconception worth addressing is that “government debt” is a single category.

It isn’t.

AFSA’s current guidance demonstrates that different liabilities can receive different treatment. State fines are not included in a Debt Agreement. However, AFSA separately lists taxation debts as capable of inclusion, while noting particular consequences that can continue to apply. AFSA also treats court-ordered restitution differently depending on whether the amount was fixed before the Debt Agreement began.

This is why statements such as “government debts cannot be included” are too broad.

Equally, saying “government debts can be included” would also be misleading.

The correct question is:

What type of liability is it, and how is that particular liability treated under the applicable legislation?

That distinction matters when someone has several different obligations and is considering a formal insolvency option.

What Happens If You Ignore Fine Debt?

Ignoring a fine generally does not make the underlying problem disappear. Depending on the jurisdiction and stage of enforcement, additional fees or enforcement measures can become available to the relevant authority.

The consequences vary considerably between states and should not be generalised.

For example, current NSW guidance warns that unpaid fines can progress to recovery action and encourages people experiencing financial difficulty to discuss the available options.

In Victoria, fines can progress through additional enforcement stages. Current Fines Victoria guidance describes consequences that can include licence or vehicle registration restrictions and, at later enforcement stages, other recovery action.

Queensland’s SPER likewise provides for enforcement action where outstanding obligations are not dealt with, while also providing instalment and hardship pathways for eligible people.

The practical lesson is straightforward: if you cannot pay, investigate your options rather than ignoring correspondence.

Common Myths About Debt Agreements and Government Fines

One common misconception is that entering a Debt Agreement means every debt immediately becomes part of one structured payment. That is incorrect. The treatment depends on the type of debt, and AFSA specifically identifies state fines as outside a Debt Agreement.

Another misconception is that a Debt Agreement is simply another form of debt consolidation loan. It isn’t. A Part IX Debt Agreement is a formal insolvency process under Australian law, not refinancing or a new loan.

There is also a misconception that because a fine cannot be included in a Debt Agreement, there is no assistance available. State fines systems can have their own payment and hardship mechanisms, as the NSW, Victorian and Queensland examples demonstrate.

Understanding these distinctions can help people avoid making financial decisions based on inaccurate assumptions.

Taking the Next Step

Government fines and consumer debts need to be distinguished carefully.

If you are struggling with both, start by identifying every liability you owe and who it is owed to. Government fines can then be discussed directly with the relevant fines authority, including any payment plan or hardship options for which you may be eligible.

Separately, if credit cards, personal loans, payday lending, utility arrears or other eligible unsecured debts have become difficult to manage, you can explore the debt-management and formal insolvency options available for those debts.

Debt Fix can provide a free assessment of your broader debt situation and explain the options that may be relevant to your circumstances. A Part IX Debt Agreement is not suitable for everyone and is subject to eligibility requirements and creditor acceptance.

The objective should not be to force every financial problem into one solution. It should be to understand each debt correctly and develop a realistic pathway for dealing with it.

Conclusion

So, can government fines be included in a Debt Agreement?

For state fines, AFSA’s answer is clear: no. They are not included in a Debt Agreement and remain payable.

But that does not mean Australians experiencing financial hardship are necessarily without options.

State and territory fines authorities may provide payment arrangements, extensions or hardship pathways depending on the jurisdiction and individual circumstances. At the same time, a Part IX Debt Agreement may potentially address other eligible unsecured debts if the individual qualifies and the proposal is accepted by creditors.

Knowing which debt belongs in which process is the critical first step.

Frequently Asked Questions (FAQs)