Part 9 Debt Agreement

Debt Agreements are often used as an alternative to going bankrupt. There is less affect on your credit rating by managing a Debt Agreement instead of going bankrupt and can save your assets. They make it possible for people to overcome financial hardship that is causing them to default on loan repayments or fixed expenses. Aside from the constrictions on lifestyle caused by bankruptcy, it is much easier to borrow money in the future, when only having a Part 9 Debt Agreement on your credit history.

A Part 9 Debt Agreement combines all existing debts into one consolidated debt. The debt or repayments that can be covered in a Part 9 Debt Agreement are unsecured personal loans or debts. Some examples of these debts are, bills, overdrafts, credit card/store cards, school fees, personal loans, Tax/HECS debts and many more. Any debt which has an asset attached to it can’t be included in a Debt Agreement. So a car loan or a home loan is listed on the Debt Agreement Proposal, that you will be normal contractual payments with these loans.

This type of Debt Agreement is regulated by the Federal Government, Insolvency & Trustee Service of Australia (ITSA). It is much better to have a Licensed Debt Agreement Administrator act on your behalf, because all stages of the agreement must be legislated by the ITSA, and will be monitored by them. What the Part 9 Debt Agreement offers is a way for you to make a weekly, fortnightly or monthly repayment that is assessed according to your budget, ie income less living expenses including mortgage and car payments, some entertainment, clothing etc. Whatever is leftover is offered to your creditors via a formal Debt Agreement Proposal.

One immediate benefit of an accepted Debt Agreement is that it gives you relief from people who are chasing you for money now. Any legal action taken against you to recoup money will be ceased, and no more interest payments can be added by your creditors. A Debt Agreement also does not attract interest charges, so all you will need to repay is the balance of your Debt Agreement.

When you have finished paying off the Part 9 Debt Agreement, all of your previous debts will be considered legally closed. As mentioned, the government has strict rules which apply to Part 9 Debt Agreements. We can help make sure you comply with all of them and streamline the application process. These are the four main points for consideration when applying for a Debt Agreement. It is important to note that the government can change the amounts mentioned from time to time.

1. You take home pay can't exceed $1157.61 per week.
2. The amount of debt to be included must be less than $80,262.00.
3. Your total assets can not be valued higher than $80,262.00
4. You can only get one Debt Agreement in any ten year period. Also you can’t get a Debt Agreement if you have been bankrupt in the last ten years.

Some important points to consider before apply for a Debt Agreement are.

1. A Debt Agreement will appear on your credit history for seven years.
2. Your name will be listed on a National Personal Insolvency Index (NPII) forever. This is a record held by ITSA and they will charge a search fee to look up this information. This is different to your credit history records.
3. All unsecured debts must be declared in the Debt Agreement, you can’t just pay of some of your debts.
4. It is not mandatory for the creditors you owe money to, to accept a Debt Agreement. If they do not accept it, ADAIS will resubmit it with some changes based on their reasons for the rejection. It is extremely rare for a creditor to reject a debt agreement again and again.
5. Part 9 Debt Agreements are very flexible. If you want to pay it off faster than agreed that is fine. There are no fees or charges for making additional repayments. You must however, always make your minimum payment.
6. A Debt Agreement needs a majority (ie, more than 50%) in the value of unsecured debts, to accept the Debt Agreement. Those who vote ‘No’ are legally bound by it if the majority vote is ‘Yes’.

ADAIS have helped hundreds of Australians successfully manage a Debt Agreement and benefit greatly from taking this action. They are complicated to arrange and professional help is always recommended by financial professional. We will do the paperwork while you focus on your business or work commitments. All of your information will be kept in the strictest of confidentiality. To find out more, or to begin the Debt Agreement process, why not give us a call today. Alternatively you could complete the contact form on this website and a friendly professional will call you back soon.

*A Part 9 Debt Agreement is also known as a Part IX Debt Agreement.