What is a Debt Agreement?

For those who have not heard of a debt agreement, it is a binding agreement between you and your creditors and falls under Part IX of the Bankruptcy Act 1966. As a result of the debt agreement, your creditors will agree to accept an amount of money that you can afford to pay, over a set period of time, to settle your debts. This set period of time is usually from 3 to 5 years. Upon paying the agreed amount of money based upon your circumstance, if there is outstanding money owed, your creditors cannot recover this from you. Before we consider presenting this as an option to you we ensure that we have looked at every other possible solution as there are some things you should consider prior to getting a debt agreement in place which we will be more than happy to speak through with you after assessing your situation.

Important things to consider when talking to any company about a potential debt agreement.

Like any major financial decision, a debt agreement is a serious step. Before considering entering into a debt agreement, be wary of companies who don't carefully assess your individual circumstances and make sure that:The administrator is registered - Legally and to ensure that you are receiving teh right advice the company must be on the Australian Financial Security Authority's list of registered debt agreement administrators. Just like we are.Ask about the fees you will incur as a result of the debt agreement - Companies usually charge fees for their services to administer this agreement. We provide full transparency on our fee schedule so you know what this will entail.

Debts that aren’t covered by a debt agreement or may have special conditions if they are included in the agreement.

Secured debts These are debts that are the result of or tied to a some sort of asset, like a home for example. As a result this maybe something you have to sell in order to recover the money owed to a lender. Joint debts Creditors, while considering to receive money as part of the debt agreement for your portion of the joint debt, still have the right to recover any other additional money from your partner in the joint debt. Other debts to consider There are a number of debts that cannot be paid out by a debt agreement and will see you still liable to pay out these debts post the debt agreement. These include:

• Any debts as a result of fraud

What are the benefits of a Debt Agreement?

While we understand that when you are considering a debt agreement you may not feel as though things are in control in your life, there are many benefits to entering into a debt agreement which will set you up for a brighter future. These include:

• Better control over your financial situation - under a debt agreement you’ll know how much you’ll have to pay each week or fortnight to your creditors which will allow you to better budget and plan your finances.

What are the consequences of a Debt Agreement?

There are some consequences that you should be mindful of when entering a Debt Agreement: Your credit file is affected for 5 years or until your debt agreement ends (whichever is later) which will inhibit you from obtaining further credit during that period of time. Your name will be listed on the National Personal Insolvency Index for a period of 5 years or the date you complete the agreement under the act of bankruptcy. Some employment or licensing restrictions do apply whilst in a debt agreement If you don’t keep up with your repayments and fall too far behind creditors are within their rights to seek termination of the agreement, resume collection activities or apply for bankruptcy against you.
Only debts in your own name are covered, with joint debts the other person/entity is still liable to make normal payments toward the debt
Only provable unsecured debts can be included in the agreement, secured debts such as car and home loans as well as state fines cannot usually be included in the agreement.