Avoiding bankruptcy through debt agreements is certainly possible and if you are eligible then such agreements may well be your best option. Whether a Part 9 or Part 10 debt agreement you must be insolvent.
Debt agreements are an alternative to bankruptcy by an agreed upon schedule of reduced payments. A Debt Agreement will put the majority of your unsecured debts into one regular payment.
Both Part 9 and Part 10 debt agreements are part of the Bankruptcy Act, and if creditors and their debtor negotiate a debt agreement, then that debt agreement becomes a legally binding contract. Generally, debt agreements have less restrictions than voluntary bankruptcy.
Part 9 & Part 10
Entering into a debt agreement can give you relief from your debts and freeze interest rates on your unsecured loans and credit cards. Any legal action against unsecured debt is no longer permitted.
There are also no overseas travel restrictions under a debt agreement and you are able to generate savings again.
Part IX Debt Agreement Eligibility
You are eligible if you :
- have not been bankrupt, had a debt agreement or personal insolvency agreement in the last 10 years.
- have unsecured debts and assets less than $111,675.20
- have an after-tax income for the next 12 months to be less than the $83,756.40
N.B. These figures are indexed and are current for 2017. They are revised on the 20th March and 20th September.
Part 10 Debt Agreements
These are less common that Part 9 debt agreements and are generally entered into when the amount owed is much higher and the situation more difficult to resolve. Part 10 is also referred to as a Personal Insolvency Agreement (PIA).
Not All Debts Are Covered
Make sure you understand all the details and options available before entering into any Debt Agreement or any other Debt Consolidation strategy, since not all debts may be covered. Unsecured debts such as Fines, HECS etc., cannot be included into a Debt Agreement or Bankruptcy.