A Formal Debt Agreement – Part 9 Debt Agreement

Part 9 Debt Agreement

A Part 9 Debt Agreement combines all existing unsecured debts into a Proposal where you only have to make one payment.

The debt or repayments that can be covered in the terms of the agreement are unsecured personal loans or debts. Some examples of these debts are, bills, overdrafts, credit card/store cards, school fees, personal loans, Tax  (ATO) Debts, Utility bills and many more. Any debt which has an asset attached to it, is not included in a Formal Debt Agreement as receiving dividends unless there is a shortfall.

Payments towards your secured creditors are allowed in the budget. Mortgage and car loans are listed on the Formal Debt Agreement Proposal, that you will maintain normal contractual payments with these loans.

Registered Formal Debt Agreement Administrators are regulated by the Federal Government, Australian Financial Security Authority (AFSA). Melissa Glenn and Australian Debt & Insolvency Solutions Pty Ltd are registered Formal Debt Agreement Administrators with AFSA.

An accepted Debt 9 Agreement offers 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 Formal 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 for the duration of the agreement. A Formal Debt Agreement also does not attract interest charges, so all you will need to repay is the balance of your Formal Debt Agreement and the RDAA setup fee (as disclosed in FAQ’s)

When you have finished paying off the Part 9 Debt Agreement, all of your previous unsecured debts will be considered legally closed. As mentioned, the Bankruptcy Legislation has strict rules and thresholds which apply to Part IX 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 Formal Debt Agreement. It is important to note that the government did change the amounts mentioned every 6 months on 20th March and 20th September in accordance with the CPI (Consumer Price Index).

  • Your after tax income for the year can’t exceed $86,800.35*
  • The amount of debt to be included must be less than $115,733.80*
  • Your total assets cannot be valued higher than $115,733.80*
  • You can only have one Formal Debt Agreement in any 10 year period (from the time you’ve finished).
  • Also, you cannot lodge a Formal Debt Agreement if you have been bankrupt, had a previous Formal Debt Agreement or a 188 Authority (Part 10 PIA Agreement) in the last ten years.

*Figures are current as at 20/03/2019

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

A Formal Debt Agreement will appear on your credit history for:
  • The period of 5 years that starts on the day on which the agreement is made
  • The period that ends on the day on which the agreement ends
  • Your name will be listed on a National Personal Insolvency Index (NPII) for 5 years. This is a record held by AFSA and they will charge a search fee to look up this information. This is different from your credit history records

All unsecured debts must be declared in the Formal Debt Agreement, you can’t ajust pay off some of your debts.
It is not mandatory for the creditors you owe money to, to accept a Formal Debt Agreement. If they do not accept it, ADAIS will resubmit it with some changes based on their reasons for the rejection. If a second Formal Debt Agreement Proposal is re-lodged ADAIS will not charge another setup fee, however, AFSA will charge another $200 lodgement fee.

Part IX 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.

A Formal Debt Agreement needs a majority (ie, more than 50%) in the value of unsecured debts, to accept the Formal Debt Agreement. Those who vote ‘No’ are legally bound by it if the majority vote is ‘Yes’.

ADAIS have helped thousands of Australians successfully manage a Formal Debt Agreement and benefit greatly from taking this action. They are complicated to arrange and set up however 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.

If you're struggling with debt and would like to begin the Formal Debt Agreement process, why not give us a call today. Alternatively, you could complete the contact form on this website and we will call you back soon.

*Also known as a Part IX Debt Agreement.