Debt Agreement (Part IX)

A Debt Agreement, also known as a Part IX, is an alternative to bankruptcy. It allows you to work with your creditors to repay an affordable percentage of your debt, over a fixed period. This solution can:

  • Freeze interest and charges
  • Settle debt for less than owed
  • Avoid bankruptcy
  • Offer one affordable monthly repayment
icon-advice-blue-green

Protection

Stop legal action and calls from creditors and collection agencies

Legally Binding

Debt agreements are administrated in accordance with Part IX of the Bankruptcy Act 1966

Debt Free Faster

Become debt free in 3 to 5 years

How it works

What exactly is a Debt Agreement (Part IX)?

A Debt Agreement is a legally binding agreement between you and your creditors to negotiate and settle debt without becoming bankrupt. It allows you to work with your creditors to repay an affordable percentage of your debts over a fixed time period, usually three to five years.

These payments are made to your appointed AFSA debt agreement administrator, rather than directly to your creditors. Once you complete your payments and the agreement ends, the remainder of the debt is dismissed.

debt-agreement
illo-graph-arrow-down

What are the benefits?

A Debt Agreement is a solution for those dealing with unmanageable debt and wanting to protect assets like a home. Advantages may include:

  • You make one monthly payment for all of your debts
  • Reduction in your monthly repayment amount
  • Interest and fees on debts are frozen
  • Agreements are generally between 3 and 5 years.
  • Stop any collection or creditor calls
  • A likely reduction in overall debt owed

What are the drawbacks?

A Debt Agreement isn’t right for everyone. There is a qualification process and the risks include:

  • Not all debts can be covered in a debt agreement. Most unsecured debts can be included.  Secured debt like cars, homes, and rent to own items, can not
  • Most debt agreements are managed by an administrator
  • Debt agreements are recorded on a public register (NPII) and can appear on your credit file for up to 5 years. This in turn can affect your ability to obtain certain types of credit
  • Not everyone qualifies – see qualification criteria below
  • If you operate under a business name that isn’t your own, you have to disclose the agreement to those you do business with
illo-document-signature

General Debt Agreement Qualifications

Debts that can be included

Below are the types of debts that are generally covered by an agreement:

  • Credit cards
  • Store cards
  • Payday loans
  • Personal loans
  • Medical, Legal, Accounting fees
  • Outstanding bills (utility, phone, etc)
  • Overdrawn bank accounts and unpaid rent

Debts that are not covered, or require special conditions if they are considered, include: Secure debts (home loan, car loan, etc), joint debts, overseas debts, HECS/HELP/SFSS, court fines, child support

Do I qualify for debt agreement?

General qualification criteria for debt agreement (Part IX) include:

  • Should be insolvent – unable to pay debts when they are due
  • Can not have unsecured debts of more than $113,349.60 (individually)
  • Have not been bankrupt, in a Part IX or personal insolvency agreement in the last 10 years
  • Can not earn more than $85,012.20 annually after tax
  • Can not have assets of more than $113,349.60 (individually)

*Note – Debt Agreements are not debt consolidation loans.

Debt Agreement Example

$1,406

Before
Before

$570

After
After

In this scenario, a debt agreement could reduce the total debt owed by $15, 300 to $34,200 and change the monthly repayment from $1,406 to $570 over 5 years.

A difference of $836 a month & saving thousands in future interest.

*Outcomes are case by case and dependent upon what the debtor can afford and what creditors are likely to accept.

Debts & Monthly Repayments

 

Credit Card #1 $12,000 $300
Credit Card #2 $5,000 $125
Credit Card #3 $10,000 $250
Personal Loan $8,000 $188
Store Card $5,000 $137
Payday Loan $1,500 $226
Overdraft $8,000 $180
Total Owed $49,500 $1,406

Debt Agreement (Part IX) - FAQ's

People Also Ask

Finding a debt agreement administrator?

To be a Debt Agreement Administrator, a person/business must go through a  registration process with the Australian Financial Security Authority (AFSA).

A full list of currently registered practitioners can be found here.

How long does a debt agreement stay on your credit file?

Debt Agreement proposals and Debt Agreements are listed on the National Personal Insolvency Index (NPII)

The length of time a debt agreement may be shown on your credit report depends on how the agreement ends. In many cases the debt agreement will appear on your credit report for five years from the date you enter into it.

Can I get a home loan after a debt agreement?

Obtaining a home loan after successfully completing a debt agreement is possible. However this will be dependent upon your new financial situation and choice of lender. In many cases finance from a traditional bank will be difficult.

Nonbank’s and specialist lenders may be able to assist. Speaking to a broker who has access to multiple lenders can help.

Can I get a car loan after a debt agreement?

Obtaining a car loan after successfully completing a debt agreement is possible. This however will be dependent upon your new financial situation and choice of lender. In many cases finance from a traditional bank will be difficult.

Nonbank’s and specialist lenders may be able to assist. Speaking to a broker who has access to multiple lenders can help.

What does a debt agreement affect?

A debt agreement is a solution to help those dealing with unmanageable debt. Its purpose is to help those struggling with debt to maintain repayments and not go bankrupt.

As with most debt relief solutions, there are pros and cons – visit our ‘How it works’ section to review. A detailed list of disadvantages can be found here.

Can I apply for a debt agreement if I have bad credit?

Yes. Bad credit should not stop you qualifying, unless you have been bankrupt, or have had a Part IX or personal insolvency agreement within the last 10 years.

Tackle Debt With The Right Solution!

Everyone’s debt is different, get proven relief strategies to determine what is right for you.

  •  Tell us about your debt
  •  See what you could save
  •  Take control of debt