In bankruptcy the debt is completely written off, not restructured. It's the debt consolidation companies like Fox Symes that just restructure the debt.
All the information about bankruptcy can be found here
www.fredappleton.com.au
You can call them too, very friendly and helpful
Secondly, the banks say they can't do more than 3 months hardship, but what choice do they have? Especially when the client has no assets.
They will keep saying:
'well, we can't accept $10 per month on an ongoing basis'
to which your friend should reply calmly:
'well, I can't continue making the full repayments. So it's either $10 per month or bankruptcy, in which case you're guaranteed to get zero payments ever because I have no assets and plenty more debt'.
If they don't accept after that he/she needs to just stop making repayments until the account defaults and gets sent to collections. Interest then stops for good.
Collection houses like Credit Corp and Collection House will always accept whatever payment you can realistically afford. They buy the debt for a % of face value, usually 50% or less. Hence they will also accept lump sums far less than the actual debt as settlement.
And they are actually very nice - just polite phone calls during working hours. That's all. Nobody shows up on your doorstep to embarrass you in front of your family. They didn't even press me for my street address; they accepted my PO Box for all communication.
Incidentally Credit Corp and Collection House are both ASX listed, and doing very well:
