If you are struggling with your debts, then a Part IX Debt Agreement may be the solution for you. A Debt Agreement is a legally binding agreement between you and your creditors on which no interest is applied – this will allow you to pay back your debt over a period of time on a fixed payment plan which is calculated to suit what you can afford to pay.
PDS specialises in Debt Agreements, with ONE EASY TO MANAGE PAYMENT PLAN AND NO FURTHER INTEREST during the debt agreement (if the debt agreement is terminated the interest and fees can be reinstated). Let our caring and friendly consultants work with you to relieve the burden of stress that debt brings with it.
You will need a minimum of $8,000 of unsecured debt for PDS to assist you with a Debt Agreement.
If you are eligible to submit a Debt Agreement Proposal, then PDS will help you with your paperwork and provide you with relevant information and documents you need to read and sign.
We will need your help because you will have to provide us with information and documents. We will tell you what is required – this will include copies of your current pay slips, bank statements, proof of rent or mortgage payments etc.
WHO CAN ENTER A DEBT AGREEMENT?
To qualify for a Debt Agreement you must meet the following criteria:
- you must not have been bankrupt, utilised a debt agreement or given an authority under Part X of the Bankruptcy Act 1966 in the last 10 years;
- have an after tax income below the indexed amount see link below
- have unsecured debts below in the indexed amount see link below
- have less than the indexed amount see link below
- indexed amounts https://www.afsa.gov.au/insolvency/how-we-can-help/indexed-amounts-0
- you must be insolvent, which means that you cannot pay your debts as and when they fall due.
WHAT DEBTS ARE SUITABLE FOR A DEBT AGREEMENT?
- Unsecured personal loans
- Credit cards
- Disconnected utility bills, such as electricity or phone bills
- Shortfalls on repossessed cars or houses
- Tax debts
- Centrelink overpayments
- Family or friends loans to you
YOU ARE STILL ELIGIBLE FOR A DEBT AGREEMENT IF YOU:
- are receiving a Centrelink benefit or a pension,
- have a job but are struggling to pay your debts,
- have a bad credit record,
- are behind in credit or loan payments,
- if your debts have been passed on to debt collectors, or
- have court action threatened or pending.
IS A DEBT AGREEMENT THE SAME AS GOING BANKRUPT?
No, a Debt Agreement is an alternative way to deal with your unsecured debts. Debt Agreements and Bankruptcy are governed by the same federal legislation (the Bankruptcy Act 1966). Consequences compared to bankruptcy in most cases can be less severe. What is the difference between bankruptcy and debt agreements?
WHAT DOES A PART IX DEBT AGREEMENT DO?
Once accepted by your creditors the Debt Agreement freezes provable unsecured debts. This will allow you to pay back the debts over an extended period of time at an amount that has been calculated that you can afford.
DO CREDITORS HAVE TO AGREE TO THE PROPOSAL?
No, all creditors do not have to agree. The majority of the dollar amount (more than 50.1%) of those creditors who decide to vote and are entitled to vote have to agree. This is then legally binding on all creditors and all creditors are legally obligated to participate in the debt agreement.
WILL A DEBT AGREEMENT AFFECT MY CREDIT REPORT?
Your credit file will be affected, which may impact on you being able to obtain credit in the future. Entering into a Debt Agreement will have no additional impact on your credit rating if you have already been subjected to defaults and/or judgements.
Both the Debt Agreement proposal and accepted agreement are registered on the (NPII) National Personal Insolvency Index. A creditor can register a default against your name with the credit reporting agency Veda Advantage.
Your Debt Agreement will be listed on your credit report for five years. Once you have completed your obligations under the debt agreement you are eligible to apply for credit, and may be considered at the creditor’s discretion.
WHAT IS AFSA?
As described by AFSA on their website.
The Australian Financial Security Authority (AFSA) is the government agency responsible for the administration and regulation of the personal insolvency system, proceeds of crime, trustee services and the administration of the Personal Property Securities Register (PPSR).
HOW LONG DOES IT TAKE?
Once your Debt Agreement has been lodged with AFSA and accepted for processing, the creditors may vote to either accept or reject the Debt Agreement Proposal within 35 calendar days.
WHILST APPLYING FOR A DEBT AGREEMENT DO I PAY MY UNSECURED CREDITORS?
You may continue to pay your unsecured creditors (if you can afford to) until your Debt Agreement has been accepted for processing by AFSA. It is important that you continue to pay your secured creditors such as house mortgage and car loan.
WHAT HAPPENS IF MY CREDITORS REJECT MY DEBT AGREEMENT PROPOSAL?
If your Proposal is rejected by your creditors, we will then contact your creditors to find out their reasons for rejecting. If it is established that they are open for a resubmission then we would work with you and the creditors to put forward a resubmission. If the file is rejected the debts with the creditors are revived. This means the creditors can pursue you for payment and any interest accrued. PDS will work with you and assist with your creditors and discuss other options.
In some cases bankruptcy could be the next best option in which case PDS can assist you.