Part 9 Debt Agreements – Know The Facts!


You may see or hear numerous adverts offering relief from mounting debts, but be aware this help is an “act of bankruptcy” and you will be charged for the service.  We thought it’s time to explain the ins & outs of Part 9 Debt Agreements!

It is important to note that a debt agreement (also known as a Part IX), is a legally binding agreement between you and your creditors. A debt agreement can be a flexible way to come to an arrangement to settle debts without becoming fully bankrupt.

How debt agreements work is generally a company (on your behalf) negotiate to pay a percentage of your combined debt at a rate you can afford over a period of time. You make repayments to your debt agreement administrator, rather than individual payments to your creditors. After you complete the payments and the agreement ends, your creditors can’t recover the rest of the money you owe.

What are the consequences of a debt agreement?

Entering into a debt agreement is a serious step and there are consequences that may impact you. Proposing a debt agreement is an ‘act of bankruptcy and your creditors can use this to apply to the court to make you bankrupt.

Understanding how this agreement works and what to expect will help you decide if it’s the right move for you.

You will have a debt agreement administrator who will manage your agreement

A debt agreement administrator is the person who manages the agreement. They work with you, and your creditors, to achieve a fair and reasonable outcome for all.

During your agreement, you have an obligation to provide information to your administrator, including changes to your circumstances.

When you apply for a debt agreement, you are able to nominate a debt agreement administrator of your choice. If you don’t nominate one, you can self administer your own agreement.

A debt agreement may affect your business

If you trade under a business name that isn’t your own, you must disclose the agreement to all people you do business with.

A debt agreement does not release you from all debts

A debt agreement will release you from most unsecured debt when you complete all your obligations and payments.

Secured creditors however may seize and sell any assets (e.g. house) which you have offered as security for credit if you are behind in your payments.

A debt agreement doesn’t release another person from a debt jointly owned with you.

For more information see: What debts does a debt agreement cover?

Your name will appear on the National Personal Insolvency Index (NPII) for a limited time

The amount of time your debt agreement appears on the NPII will vary depending on your circumstances, and how your agreement ends.

Completed debt agreements

  • 5 years from the date the debt agreement was made or
  • the date the obligations are complete, whichever is later.

Terminated debt agreements

  • 5 years from the date the debt agreement starts or
  • 2 years from the date of termination, whichever is later.

Debt agreements declared void

  • 5 years from the date the debt agreement starts or
  • 2 years from the date of the court order, whichever is later.

Withdrawn, rejected, cancelled or lapsed debt agreement proposals

Will appear on the NPII for 1 year from the day that:

  • you withdraw the proposal or
  • the credit provider refused the proposal or
  • the acceptance of your proposal was cancelled or
  • the proposal lapsed.

Entering a debt agreement can affect your ability to obtain future credit

Your details may appear on a credit reporting agency’s records for up to 5 years, or longer in some cases. For more information about credit reporting is available at ASIC’s MoneySmart.

Thanks to Australia Financial Security Authority (website) for the information

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