Part 9 Debt Agreement, or personal insolvency agreements, may be terms you have come across as you consider your options for bankruptcy, but you aren’t sure what the differences are and how they relate to bankruptcy. Bankruptcy Advisory Centre clarifies any misconceptions you have and advises which form of agreement may be better suited for your personal situation.
Debt agreements and Personal Insolvency Agreements offer a formal method of settling debt in a way that you can afford. Whilst both options are different from bankruptcy, they are still acts of bankruptcy, so it’s important to understand the benefits and consequences of all personal insolvency options. This way, you’ll be able to decide the best way to solve your debt problems.
What Is A Part 9 Debt Agreement?
A Debt agreement (Part IX/9 of the Bankruptcy Act) is when an insolvent individual enters a formal agreement with creditors. This becomes a legally binding agreement between you and your creditors, where you negotiate to repay a percentage of your unsecured debt, generally over a 3 to 5 year period.
A part 9 debt agreement is aimed at lower level debts often associated with consumer liabilities.
Who Will Manage It?
Only a registered bankruptcy trustee, registered agreement administrator, or the official trustee can administer the agreement.
This is because such types of proposals can be complex. The process involves many steps, and a high degree of experience and skill is needed to set it up and further administer it.
What Does It Cost?
There are various fees involved in these kinds of agreements, and they often vary between administrators and trustees.
- A set-up fee by the administrator or trustee – this fee relates to the cost of putting your proposal together
- AFSA lodgement fee – a fee that the Federal government charge for lodging your proposal
- Administration Fee – a fee that your trustee or agreement administrator will charge for administering your agreement if and once your creditors accept it
- AFSA Realisations Charge – a levy which is charged by the Federal government if and when your proposal is accepted, and it relates to the cost of conducting enquiries, investigations, monitoring and the regulation of trustees and agreement administrators
What Are The Consequences of Having A Part 9 Debt Agreement?
A debt agreement is still an act of bankruptcy, so there will be a listing on your credit report for five years, just like bankruptcy and personal insolvency agreements. The government will also record your debt agreement on the National Personal Insolvency Index (NPII).
If you’re self-employed and trade under a business name that’s not your personal name, you’ll need to disclose your agreement to all people you do business with. You’re also unable to apply for goods or services on credit, cheque or hire purchase above a set amount without disclosing that you are currently in an agreement.
By committing an act of bankruptcy, a creditor can apply to the court to make you bankrupt if your agreement fails.
Am I Eligible?
- Your after-tax income doesn’t exceed a certain amount.
- Your unsecured debts and assets don’t exceed a certain amount.
- In the last ten years, you haven’t been undischarged from bankruptcy, a personal insolvency agreement (Part X/10) or a debt agreement (Part IX/9).
- You are insolvent. You’re unable to pay your debts as and when they fall due.
Is A Part 9 Debt Agreement Right For Me?
That’s really up to you, but if you’d like more information on how we can help you with a debt agreement, please get in touch with our team or call us on 1300 887 210
It’s never too early to seek expert advice.
Get in touch for a free confidential consultation to discuss your options.
In Financial Difficulty?
Considering a Debt Agreement?
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