Is a Part 9 Debt Agreement an option for me?


A Part 9 debt agreement is an alternative to bankruptcy and debt consolidation, that is put into place without you negotiating with your creditors or attending a meeting of creditors.

A debt agreement enables you to compromise your debts and trade out of financial difficulty by coordinating monthly payments with your cash flow over three years if you are not buying your home or 5 years if you are buying your home.

Bankruptcy releases you from most if not all your debts whereas a Debt Agreement will enable you to pay a compromised amount that you can afford over either 3 or 5 years.


Why Consider a Part 9 Debt Agreement?

A Debt Agreement can be a good option for people who want to avoid bankruptcy and \’trade out\’ of their financial difficulties by entering an affordable payment arrangement.

A Part 9 Debt Agreement is also a good option for people who are considering a debt consolidation loan. Consolidation loans can be very expensive as for most loans you will have already been charged interest and you then pay interest again on the debt consolidation loan. With a Part ix Debt Agreement, there is no debt refinance. Further, your debt is often reduced and there are no interest charges on your Debt Agreement payments.

In this blog, we discuss how Debt Agreements work and when they can be a good option for you.


How Does The Debt Agreement Work?

What happens is, we assist you to prepare a Debt Agreement Proposal, we then lodge it on your behalf with AFSA for them to circularise to your creditors. Your creditors vote electronically on whether they accept or decline your proposal.

Of your creditors who vote, if greater than 50% in value accept your proposal then most, if not all, of your creditors are bound by your Debt Agreement. This includes creditors who did not vote and those that voted against your proposal.

Once you have a part 9 debt agreement your creditors cannot continue debt collection action or make an application to the Court for you to be made bankrupt, they are restricted to dealing with your Debt Agreement Administrator.


Saving Your Home With A Debt Agreement

If you are concerned about losing your home, a Part 9 Debt Agreement is a possible solution. A Debt Agreement can resolve your debt into a payment arrangement you can afford to protect your home. If this is something that interests you, give us a call on 1300 794 492 and we will discuss your circumstances and options without obligation.


Debt 9 Agreement Required Attributes

For a Part 9 Debt Agreement to be a viable option that will work for you, you need to:

  • Have secure employment
  • Have stable and consistent income
  • Be able to afford your offer to your creditors.


Debt Agreement Eligibility Criteria:

To be eligible for a Debt Agreement you must be unable to pay your debts as they fall due and have not been in a Debt Agreement, Personal Insolvency Agreement or Bankruptcy in the last 10 years. Also, your debts, property value and income must be below prescribed amounts which are adjusted regularly for the CPI. Current prescribed amounts are:

Debts: can’t total more than $123,578.00

Property: equity can’t total more than $247,156.00

Income: your current after-tax income cannot exceed $92,683.50


Negative Effects of a Debt Agreement

It will be shown on your credit record and the NPII for five years. Also, proposing a Debt Agreement is an act of bankruptcy. This means that if creditors do not accept your proposal if a creditor is owed more than $10,000, they may be able to act through the Courts to have you made bankrupt.


Positive Effects of a Debt Agreement

Creditors cannot charge interest or fees on the compromised Debt Agreement amount. Further, you are protected from your creditors. They deal with the Administrator and not you and cannot continue or commence debt collection action. Further, your creditors cannot make you bankrupt, they are bound by your Debt Agreement.

Your debts are compromised and compacted into a manageable repayment arrangement that you can afford.

All creditors are bound by the decision of those creditors who vote for your Debt Agreement. Your Debt Agreement will be approved if greater than 50% in value of those creditors who vote, to approve your proposed Debt Agreement. Creditors who do not vote and creditors who vote against your proposal will be bound by the voting of your creditors who chose to vote.

A Debt Agreement is put in place without you attending a meeting of your creditors or negotiating with your creditors.

If you owe money to the ATO, don\’t worry, liabilities owing to the ATO are caught.


Your Employment And Debt Agreements

If your employment is sensitive, we recommend you check with your industry body, HR, and/or employment contract whether your employment would be compromised if you were to enter into a Part 9 Debt Agreement.


Incurring Credit And Debt Agreements

If during your Debt Agreement you will be incurring credit or buying goods for more than $6,144 (this amount is regularly adjusted for CPI) then you are required to disclose to the people you are dealing with that you are in a Debt Agreement.


Operating A Business And Debt Agreements

If you intend to operate a business while subject to a Debt Agreement, you will need to operate in your own name. If you don’t, you are required to disclose your Debt Agreement to all people you do business with. Also, if you borrow or buy goods for more than $6,144 you are required to disclose your Debt Agreement.


For Further Information:

We are here to help you. If you have any questions on Debt Agreements or would like to discuss your situation, give us a call on 1300 794 492 or email: and we will answer your questions in a friendly manner without cost or obligation.

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