What is a Part IX debt agreement?
Are you have difficulty making repayments? It may be possible for you to have your debt reduced, through terms you propose. This maximises the chance of the terms suiting your needs.
What is a Part IX debt agreement?
- A Part IX debt agreement is provided for under the Bankruptcy Act 1966. It states you may enter a binding legal agreement with creditors to repay your debts in a specific manner, rather than declaring yourself bankrupt.
- Once you fulfil the terms of your agreement, a payment is taken as fulfilment of your whole debt amount. This means you are no longer required to make repayments. This differs from debt consolidation, as you are not taking out another loan to fulfil your current debts. Your debt will be paid to the creditors through an administrator in a Part IX agreement.
Can I enter into a Part IX debt agreement?
You are only eligible for a debt agreement if you are insolvent. This requires you to be consistently unable to pay debts when they are due. You must also meet the other requirements under the Act, such as:
- Earn a net amount of under $66,284.40
- Have unsecured debts of less than $88,379.20
- Have not entered into a debt or bankruptcy agreement in the previous ten years
- Property that would be divisible among creditors if the debtor were bankrupt, valued at less than $88,379.20 (figures are subjected to change)
Qualifying for a debt agreement Can the debts be included in agreement?
- Credit card, tax repayments, or personal loans may be included in a debt agreement.
- Car loans and mortgages can’t be included.
Are you able to make the reduced repayments?
- If you cannot commit to the reduced repayments of your debt agreement, entering one will not solve your problems.
- You may, however, enter an agreement to sell an asset rather than make repayments.
What are the costs involved?
- There is a fee for the administrator’s service.
- This is usually considered when creating your agreement, and settled as part of your repayments.
Will entering a debt agreement affect my credit file?
- Yes, entering a debt agreement will be listed on your credit file.
- There are ways to have your credit repaired when you are back in a stable financial position.
How do I enter a debt agreement?
- You must complete a Part IX Debt Agreement Proposal to enter a debt agreement. This will cover who your administrator will be, and how their wage will be paid, as well as the specifics of what property you will sell or transfer, if any. Your form must be lodged with the Insolvency and Trustee Service Australia (ITSA).
- Following this, creditors will meet and discuss your proposal, resulting in an accepting or declining you for a debt agreement.
- If your proposal is accepted, the creditor is bound by it and will no longer be allowed to take action against you for recovery of unsecured debts. Your administrator will pay the creditors on your behalf.
- If, however, your proposal is declined, you are entitled to make changes to it and submit it again for reconsideration. Otherwise, you can look at making a Personal Solvency Agreement (Part X), or, alternatively, file for bankruptcy. If your circumstances change after entering into an agreement, you can apply to have the agreement altered to suit your new financial situation.
Will my income be affected by a debt agreement?
- Not in most cases. You are able to continue your current job with no change in income.
- You will, however, need to alter your budget and live within your means so you are able to stick to the terms of your debt agreement.
What if I break the debt agreement?
- Breaking the terms of a debt agreement results in it’s automatic termination.
- If this happens, your only course is to file for bankruptcy, or a Personal Solvency Agreement (Part X).
When will the agreement end?
- Your agreement ends once you fulfil the obligations of the debt agreement. However, if you break the terms of the agreement, it will also end (see above).
What are the benefits of entering a debt agreement? If you are unable to keep up with your monthly bills and repayments, a debt agreement may be the solution to your financial troubles. A few benefits of an agreement include:
- Creditors no longer chasing you to recover debts once your debt agreement is accepted.
- No extra interest on your loans.
- Avoid the restrictions imposed by declaring bankruptcy.
- You are able to continue working and generating income unaffected in most cases.
- Reduce the stress of financial troubles in your life
Applying for a debt agreement
- Speak to professionals to arrange a debt agreement and organise your financial affairs.
- Specialists like Naritas Finance will provide you with the solutions you need to solve your debt problems, so you can live your life debt free!
Do you think that you qualify for a debt agreement? Chat Live with one of the Naritas qualified professionals who can help you get out of debt.