Debt Agreements

Australian Debt Solutions    

Debt Consolidation made easy

If you wish to discuss a Debt Agreement in more detail simply click here and we will you back when you specify.

A Debt Agreement (or a Part IX) is a legally binding debt consolidation arrangement between you and your creditors whereby you repay a portion of the debt you owe. For many, Debt Agreements are a way of not having to declare bankruptcy and are an extremely effective way of clearing outstanding debt. You only repay what you can afford either by on a weekly or fortnightly basis typically between three and five years.

Debt Agreements are by no means an easy option and ultimately it is your creditors who can either approve or reject them. The good news is that the vast majority of Debt Agreements are approved and if they are rejected it is possible to negotiate with creditors until they are.

 

 

 

 

 

 

 

The main criteria for a Debt Agreement are:

 

·   Your total unsecured debt exceeds $10,000 and it not higher than about $80,262.00. (You cannot include secured loans, mortgages and hire purchase agreements in your Debt Agreement)

 

·   You must not have assets exceeding a value of $80,262.00.

 

·   You are in a secure job and earning regular income which does not exceed $1,154.45 after tax per week.

 

·   You cannot be a discharged bankrupt or have had a Debt Agreement in the past ten years.

 

The benefits of entering a Debt Agreement are:

 

·   Part of your total debt may be written off.

 

·   The agreement lasts between 3 and 5 years, after which you are totally debt free.

 

·   You will avoid any stigma, restrictions and obligations that usually come with bankruptcy.

 

·   You are fully protected from any further actions that your creditors would normally be entitled to purse.

 

·   The interest and charges are frozen on all of your debts from the date of acceptance of your Debt Agreement

 

·   You will pay a single affordable regular payment for the duration of the Debt Agreement.

 

How a Debt Agreement works

 

Firstly, you will require the services of a Debt Agreement administrator (Australian Debt Solutions can provide one of these)  or an unregistered administrator, friend or associate providing they satisfy ITSA’s* eligibility test.  Your chosen administrator will work with you to assess your circumstances. In order for them to proceed they will need to establish that you are indeed insolvent (unable to pay your debts when they fall due).

 

After your administrator has established you are insolvent they will then assess your income and expenditure and calculate what you can realistically afford to offer your creditors as a repayment. Following this your chosen Debt Agreement administrator will then begin the process of drafting your Debt Agreement proposal which will in turn be submitted to ITSA* for the next stage of the process.

 

How a Debt Agreement is approved

 

When your chosen Debt Agreement administrator is satisfied that your proposal is ready, they will then submit it to ITSA* for the voting process. ITSA* will review your proposal ensuring that it satisfies all the necessary criteria before forwarding it to your creditors.

 

After receiving your proposal and other relevant documents your creditors have a 35 day period in which to vote whether or not to accept your proposal. In order for the Debt Agreement to be accepted the creditor or creditors holding more than 50% of the total outstanding debt must vote in favour of it. Once accepted, all of your creditors are bound by its terms and conditions of it including those creditors who voted against it.  

 

What happens when a Debt Agreement is approved

 

Once your Debt Agreement has been approved you will then be bound by the terms and conditions of it. You will make a weekly or fortnightly payment to your Debt Agreement administrator who will in turn forward a payment to your creditors, to ITSA* and take a fee themselves . It is important to note that you only make a single payment; you do not have to make a separate payment to the relevant parties.

 

* Who are ITSA an what do they do?

 

ITSA (Insolvency and Trustee Service Australia) is the government’s regulatory body who legislate and oversee all aspects of personal insolvency. There role in the Debt Agreement process is to ensure that the Debt Agreement has been received and recorded on the National Personal Insolvency Index and to then forward the Debt Agreement proposal and supporting documents to creditors. ITSA then records the votes received and informs all concerned whether or not the Debt Agreement has been accepted.

 

What we can do now

 

Australian Debt Solutions can help you apply for a Debt Agreement. If you meet the criteria above or need further advice then all you need to is click on the link below and we will call you back at a convenient time. This site also includes a Debt Agreement FAQ which can be found by clicking here.

There really is no need to delay. Simply click here to see if you qualify for one of our debt reduction programmes

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