Debt Agreement

What is a Debt Agreement?

A debt agreement is a binding agreement between you and your creditors.

Who is a Debt Agreement For?

If you have unsecured debts such as credit cards, personal loans, telephone bills or tax and you are are trying to deal with Collection Agents or Debt Collectors, a Debt Agreement could be a practical solution.

This agreement lets you pay back your unsecured creditors through a repayment plan that fits your budget, with one payment per pay cycle and leaves you enough money to live on.

Stop the calls, Freeze interest and make an affordable repayment plan 

What are the benefits of a Debt Agreement?

  • All interest is frozen on every unsecured debt you have
  • It stops creditors hassling you and protects what you have
  • Does not require a good credit history
  • Everything becomes more affordable as payments are based on a realistic budget that you can afford
  • A single Direct Debit per payment cycle covers all your liabilities
  • Payments can be made in line with how you're paid - weekly, fortnightly or monthly
  • So long as you stick to your payment plan, you are protected by government legislation
  • Agreements usually run over four or five years
  • Debt Agreements do not affect your right to run a business or company or travel overseas
  • Not all creditors need to agree to the Debt Agreement (only 50% of debt value)
  • Once under the protection of a Debt Agreement, you can keep your family home and secured assets like Motor Vehicles
  • Regardless of a changing situation, you will not need to declare Windfalls, Inheritances or Compensation Payments once the agreement has been set

What are the limitations of a Debt Agreement

  • Not all Debts may be included such as secured Debts
  • If you wish to keep Cars Houses etc you must keep payments up to date
  • You may not qualify if you have too many Debts
  • You will appear on the NPII and Credit reports for 5 years maybe more
  • If you trade under a business name that isnt your own you have to inform people who you deal that you are in a Debt Agreement
  • While a Debt Agreement is covered under Part IX of the Bankruptcy Act to offer an alternative to Bankruptcy, it is still considered an act of Bankruptcy and may affect certain employment or work license arrangements.

If you do not qualify for a Debt Agreement, or you need an industry license for your job, an Informal Agreement may be a better option for you.

Answers to questions you may have


  • If you have unsecured debts of over $8,000
  • Are struggling to make repayments and are in financial difficulty
  • Owe less than $111,675.20 in total unsecured debt
  • Have less than $111,675.20 equity in property
  • Earn less than $83,756.40 after Tax per year

Chances are you will qualify.

Only unsecured Debts up to a value of  $111,672.20

Examples of unsecured Debts are: Most Credit Cards, Personal Loans, Tax Debts, Insurance claims against you, Phone or old Rent from previous address', Store accounts.

Examples of a Secured Debt that you need to keep paying are Most Car, Bike, Boat Loans. Home loans and Rental Plans on Household Goods and Electronics. If a car is surrendered or repossessed the balance of the loan will then become unsecured. If you have sold the car or bike with out permission from the Lender you may not be able to unsecure the loan.

Debts that can't be put in a Debt Agreement are Traffic and Toll fines, Court Ordered Fraud Settlements or fines and Government Accumulated Help Debts.

Accumulated Help Debt includes any unpaid HECS HELP, FEE HELP, VET FEE HELP, OS HELP and SA-HELP debts.
Also includes any Higher Education Contribution Scheme (HECS), Postgraduate Education Loan Scheme (PELS), Open Learning Deferred Payment Scheme (OLDPS) and Bridging for Overseas-Trained Professionals Loan Scheme (BOTPLS) debts you incurred before 2005. SRE Debts and 
Child maintenance arrears can be included but there are conditions. 

Any Tax you owe may be put into a Debt Agreement and the debt will be discharged at the end of the Debt Agreement.  However, the Tax department will keep any Tax Refunds you may receive during the Debt Agreement, until they have received all of their money. Typically not all of the Debts in a Debt Agreement are paid back in full and are written off at the end. The Tax Debt is no different, except that the Tax department is allowed to keep any Tax Refunds, to make up the shortfall during the Debt Agreement.  But if the Tax Debt has been generated via fraud and you have tried to deceive the Taxman, they may still pursue any balance owing after the Debt Agreement has been completed. Lately they seem to have been more active in this area. Here is an exact lift from the AFSA Government Department Website 02/09/16

"Debts relating to income tax and GST obligations are, if not incurred by fraud,  provable in debt agreements and released when debt agreements are completed.  This means that, in most cases, the Australian Taxation Office can vote and receive dividends in a debt agreement and cannot seek to recover the balance from the debtor after completion of the debt agreement. However, you should be aware that the Australian Taxation Office may, in certain circumstances, offset a tax refund that was due to you against a debt you owe the Commonwealth.

If you owe money to the Australian Taxation Office and this debt arose due to fraud, you will still need to repay the balance owing to the Australian Taxation Office when the debt agreement ends."

Yes. You can even be a Company Director

Yes, as long as all payments are maintained.

No. As long as creditors that control over half of your debt, agree to the debt agreement the balance of creditors must comply with the government lodged agreement.

You do not have to tell your boss or your partner. However if you are planning to refinance a house or similar or you have joint loans, it will be better to discuss this with your partner.

Your Debt Agreement will be listed on your Credit Report, one day from approval and for a period of 5 Years. After this point it will drop off and give you the opportunity to have a fresh start.

Being on a credit report will limit your ability to borrow additional money during this period. If you work in an Industry where your credit rating may be an issue (eg: Banking or Finance and in some States Real Estate Licensees or holders of Building Licenses) it may be better to discuss other options).

A part IX Debt Agreement is designed to prevent you having to declare Bankrupt. It is designed as a simple way to get out of a Difficult Financial Situation without doing too much Damage.

It will restrict you from borrowing money for the period of the debt agreement.

It will appear on your credit file for 5 years and 1 day and then disappear if you have completed your payment plan.

Because a Debt Agreement prevents any further Debt Defaults from before the Debt Agreement completion date, being put back on your credit file, it will allow your Credit File to be reset clean at the end of the 5 year period. Of course if you don't pay other debts like phones and electricity bills they will still default on your report.

The Debts will be locked into a set amount and your only obligation is to pay the payment plan you have agreed to, at which point your obligation ends.

If you pay your Debt Agreement out early, you can then look at borrowing money again or even applying for a home loan if you have been able to save some money. But be aware there are still difficulties until it drops completely from your credit File. You may have to look outside a bank for finance (Talk to Fast Debt Help for options) and there may be a higher Interest Rate or bigger Deposit required.

You will keep your Major Assets including the family home and cars. Contact Fast Debt Help to confirm current Thresholds that you can keep and still qualify.

A Part IX Debt Agreement is designed to help you avoid Bankruptcy.

Bankruptcy makes it more difficult to borrow money, even after the bankruptcy has been terminated.

  • You will not be able to be a Company Director.
  • Any Overseas travel may be restricted and you may have to surrender your passport.
  • Any Major Assets have a much lower threshold before being put towards your debt.
  • You will have to complete an income assessment every year.
  • You will be required to pay 50% of your income after tax if you earn over a certain amount. This will vary according to your number of Dependants.

See Australian Financial Security Authority or contact us here at Fast Debt Help for current amounts and a more detailed explanation.

Any Windfalls you may have such as Tax Returns, Inheritances or Termination Payments will be included in this income.

For more information on Bankruptcy, see the Bankruptcy Assistance section.

If your Debts, Income or Asset levels are too high to qualify for a Part IX Debt Agreement, Fast Debt Help will look to organise an Informal Debt Arrangement.

This could still generally help you out of a difficult financial situation. You could still have one payment per pay period to an administrator and in many instances we may still be able to freeze the interest.

The objective is to get you into a position with a payment plan that can get you out of Debt and back in control.

This can be used as short-term solutions or as a permanent arrangement.

The Short Answer is Yes.
But be aware you must start paying back the Debt when your income reaches the compulsory repayment threshold. This will be handled by the Tax Department and will be payable whether you are currently bankrupt or not.

For more information please refer to the Australian Financial Security Authority site.

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