A Debt Agreement is a legal alternative to bankruptcy, and involves an arrangement between a debtor and their creditors which allows them to pay back an agreed amount of their outstanding debts over a period of time.
After a Debt Agreement Administrator is appointed to an individual case, this representative works closely with the debtor to understand their financial situation. Together they create a repayment plan, usually over a period of 3-5 years, which is both affordable for the debtor and fair for the creditors. One the Debt Agreement has been accepted, the Debt Agreement Administrator pays dividends to the creditors out of the repayments and handles all correspondence with them.
A Debt Agreement is not suitable for everyone, however. To be eligible, you must have unsecured debts of less than $106,561, earn an income of less than $79,921 p.a. (after tax) or $111,321 p.a. (before tax),and have equity in assets of less than $106,561.
A Debt Agreement comes with both positive and negative consequences. Whilst a mark will be placed on your credit file when you lodge a Debt Agreement, it can give you the opportunity to become debt free, and the stress of growing debts and creditor calls is lifted from you.
Here at Insolvency Services Australia, we are committed to ensuring that you are fully informed about all of the options available to you to rid yourself of debt. So if you are struggling with financial hardship, contact ISA on our 24/7 toll-free hotline on 1800 003 883.