What is a Part 9
Debt Agreement?

If you are experiencing severe financial pressure a part ix debt agreement is a legally binding option available to address and resolve your overwhelming debt. A Debt Agreement typically involves a payment arrangement over a set number of years. Debt Agreements are provided under Part 9 of the Bankruptcy Act. You cannot be made bankrupt while you are subject to a Part 9 Debt Agreement.

Credit card debt is covered by Bankruptcy

Overview of a Part 9 Debt Agreement

With the consent of your creditors, your unsecured debt is marshaled into a pool, and interest stops being charged on your debt. If necessary, the amount you owe can be reduced with creditor approval. Once your part 9 debt agreement is in place you then make one payment to the part 9 debt agreement administrator each month or fortnight or week, As the funds accumulate the Debt Agreement Administrator then pays your creditors. A Part 9 Debt Agreement can involve you paying your creditors in full or a significant portion of your debt as full and final payment. It comes down to what you can afford and what your creditors will accept.
A Part 9 Debt Agreement is not debt consolidation. Debt consolidation involves you replacing your existing debt with a debt consolidation loan. Consolidation loans come with the cost of putting the loan in place and can result in you paying interest on interest. Also, it can involve you paying a higher rate of interest for the term of the debt consolidation loan. With a Debt Agreement, it is much easier for you to repay your debt as you cease paying interest.

Benefits of a Part 9 Debt Agreement

The biggest benefits of a Debt Agreement are that you no longer deal with your creditors, do not pay interest and your debts can be paid off over time. I think stopping the payment of interest is possibly the biggest benefit that Debt Agreements provide – making it far more realistic to pay off your debt.


Trap to Avoid With Part 9 Debt Agreements

The biggest trap to be aware of when considering a part ix debt agreement is to make sure you do not over-commit – leaving yourself with little money to live for the next 3 to 5 years. This is a trap. Being under financial stress is dangerous – it is not just about your finances – it is about your health and wellbeing, relationship, and your future. The amount you pay under a Debt Agreement must be manageable for the Debt Agreement to work for you.

Explore Part 9 Debt Agreements Further

For further reading on Part 9 Debt Agreements, good articles to read are: Using a Part 9 Debt Agreement to Save Your Home. and How Is My Part 9 Debt Agreement Finalised?

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.

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