Part 9 Debt Agreements

Consider A Part 9 Debt Agreement

If you are feeling swamped with debt and are looking for a solution but believe that with some assistance you will be able to get past this difficult time without incurring the high cost of a debt consolidation loan or needing the protection of bankruptcy, then a part ix debt agreement may be a good option for you to consider.

To qualify for a Debt Agreement, your unsecured debts cannot exceed $123,578. Your equity in property cannot exceed $247,156. Your after-tax income cannot exceed $92,683.50.

A Debt Agreement lets you avoid the high cost of debt consolidation. It is a cost-effective and legally binding way of settling your debts, provided by the Bankruptcy Act.

Reduce Your Debt and Make It Interest-Free With a Debt Agreement

FamilyRather than the high cost of consolidation loans, with a Debt Agreement, your creditors can agree to reduce the amount you owe to an interest-free amount that you can afford to pay by monthly instalments over three years or up to five years if your debt agreement family are buying a house.

Once the Debt Agreement is approved, you then adhere to the payment plan, and once paid – your debts are finalised.

Throughout your Debt Agreement, you do not deal with your creditors. That is done by your Debt Agreement Administrator. You pay your required monthly payment to the Debt Agreement Administrators trust account who in turn pays your creditors on a pro-rata basis.

Benefits of a Part 9 Debt Agreement 

The big benefits of Debt Agreements are that you no longer deal with your creditors and your debt is reduced to an interest-free amount. Stopping the interest can make it far more realistic for you to pay off your debt. Because a Part 9 Debt Agreement has:

  • Very low costs, and
  • Can reduce the amount of debt you have to repay, and
  • Stops interest being charged,

At Understanding Bankruptcy we see a part 9 debt agreement as a far more cost-effective solution than debt consolidation. Also, with a Part 9 Debt Agreement, you have no more juggling of debts, you have the certainty of one repayment amount each month and can plan for your future with certainty.

Trap to Avoid with a Part 9 Debt Agreement

The biggest trap to watch out for is to make sure you do not get caught in the moment and do not over-commit the monthly amount you will be required to pay under your Debt Agreement. If you do this, it will leave you with little money to live on over the next 3 to 5 years. We only see Part 9 Debt Agreements as a viable solution for your excessive debt if your debt is reduced to an amount you can afford to repay.

What's Great About Part 9 Debt Agreements

What we think is great about Part 9 Debt Agreements is that you do not attend a meeting of creditors to negotiate a settlement with your creditors. Your proposed Debt Agreement Administrator works with you to sort out an offer amount you can afford, and creditors will accept. The offer is then circularised to your creditors, on your behalf. Creditors vote electronically and if greater than 50% in value approve your offer, then the Debt Agreement will be binding on most, if not all your creditors.

Once you have a Part 9 Debt Agreement, creditors can no longer contact you for payment and must deal with the Debt Agreement Administrator for all issues regarding the outstanding debt. You focus on making your monthly payment and getting on with life.

A Part 9 Debt Agreement Can Protect Your Home

1Very often, people we talk to are very concerned that their swamping debt will cause them to lose their homes. The good news is that a Debt Agreement can be used to protect your home. If this is relevant to you, we recommend our article ‘Using A Debt Agreement to Save Your Home’.

The Part 9 Debt Agreement Is a Low-Cost Option

It costs you very little for us to help you to propose a Part 9 Debt Agreement. If a Debt Agreement is accepted by your creditors our fee gets paid by your creditors. With this approach, you can have confidence that we will only submit a proposal that we believe your creditors will accept.

We Can Help With A Part 9 Debt Agreement

We are here to help you. If you have any questions on Part 9 Debt Agreements or would like to discuss your situation, give us a call on 1300 794 492 or email: hello@understandingbankruptcy.com.au and we will answer your questions in a friendly manner without cost or obligation.

Further Part 9 Debt Agreement Reading

For further reading on Part 9 Debt Agreements, a good article to read is: Is a Part 9 Debt Agreement an Option for Me.