The Difference Between a Personal Debt Agreement and Personal Insolvency Agreement

f you find yourself struggling with your personal finances, then it may be time to start exploring options to help get you out of debt.

Two options that you may come across is a Debt Agreement and Personal Insolvency Agreement.

These two solutions are similar in some ways but are also different in others.

This article will enlighten you to the differences between the two so you can determine which one best suits your needs.


First, a Debt Agreement and a Personal Insolvency Agreement is similar in the sense that they both help stop further action from any creditors as they will all be bound by the arrangement. This means that whilst you are in one of these agreements, they cannot take any legal action against you or continue to harass you about your debts.

Any interest on debts will be stopped and you will only have to pay back what is stipulated in the agreement.

At the end of the agreement, your creditors will also be forced to write off any debt that you cannot repay. The arrangement usually lasts for 3-5 years,

A great advantage of both these agreements is that you will not be as restricted as other solutions such as Bankruptcy as you may be able to keep your house, vehicle and travel overseas.

However, it is important to note that whether you enter into a Debt Agreement or a Personal Insolvency Agreement, this will be recorded on your credit file.


While these two agreements are similar in many ways, there are also some distinctions between them, largely relating to the eligibility criteria that you have to meet to enter into these arrangements.

While the criteria are the same for both options – income, debt and assets – the thresholds that are established differ.

To enter into a Debt Agreement, you need to:

  • Be insolvent (unable to pay your debts as and when they fall due),
  • Have unsecured debts less than <$ 110,892.60,
  • Have equity in assets less than <$ 110,892.60; and
  • Have an annual income (after tax) which is below >$ 83,169.45.

On the other hand, to enter a Personal Insolvency Agreement, your income, debt and assets need to be higher than these stipulated amounts.

In addition, you may be able to act as a company director if you are in a Debt Agreement but not if you are in a Personal Insolvency Agreement.

With a Personal Insolvency Agreement, you will need a Registered Trustee, whereas with a Debt Agreement a Registered Debt Agreement Administrator can handle it for you. The good news is that here at ISA we have both a Registered Trustee and a Registered Debt Agreement Administrator.

We hope that this article has helped you differentiate between two seemingly similar debt solutions. However, if you want to learn more or would like to speak to a professional debt consultant who can give you expert advice specific to your needs, then please contact ISA on our 24/7, toll-free hotline now – 1800 003 883.


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