- A debt agreement, also known as a Part IX (9), is a legally binding arrangement between you and your creditors. It provides a flexible way to settle debts without resorting to bankruptcy.
A registered debt agreement administrator negotiates with your creditors to repay only a portion of your outstanding debts over a manageable period (usually three to five years). The rest of your debt is wiped.
Once established, a debt agreement becomes legally binding. You commit to paying a set amount of your debt over the agreed-upon period, and creditors agree to accept this reduced amount as a full settlement.
Part IX Debt agreements provide a way to avoid bankruptcy while still addressing your financial obligations.
To apply for a debt agreement, you must meet certain criteria, including the total amount of your unsecured debts and your income level.
The entire process will be handled by your debt agreement administrator. This includes the proposal, managing payments, and liaising with creditors.
While debt agreements offer relief, they have implications. Debt Agreements fall under the Bankruptcy Act, and therefore, your ability to obtain credit may be affected. The agreement will appear on a public register for approximately five years.