When a person enters a Formal Debt Agreement, they would have their name listed on the National Personal Insolvency Index (NPII), for 5 years. This is a list of all the people in Australia who have entered a Formal Agreement with creditors or who have declared themselves bankrupt. Those who are declared fully bankrupt are listed on the NPII forever. The NPII contains a person’s basic information and can be accessed by anyone for a fee. As a Formal Part 9 Debt Agreement is an act of bankruptcy, entering one can cause your credit file to be listed for up to 5 years and can cause difficulties even when seeking finance after the agreement.
Unlike a Formal Debt Agreement, an Informal Agreement allows individuals to reduce their debt, pause their interest and make repayments peacefully. An Informal Agreement may not bear an impact on a person’s credit file!
Formal Debt Agreements are legally-binding agreements legislated under the Bankruptcy Act 1966 between a person who cannot pay his or her debts and his or her creditors. An Informal Agreement, however, allows a person to renegotiate the terms of their debt and settle on a repayment arrangement that they can afford. Practically, it offers individuals a way to get out of debt without having to suffer any long-term or lasting consequences that can be associated with a Part 9 Formal Debt Agreement, or with declaring bankruptcy.
At Australian Debt and Insolvency Solutions (ADAIS), we provide advice to countless Australians seeking a way to manage their debts. When it comes to determining your options for debt relief, we seek to provide recommendations that help you find a way out of debt effectively and in the shortest amount of time possible.