5 steps to setting up a Debt Agreement

The 1st step in setting up a Debt Agreement – establish if you are eligible

The first task an experienced Registered Debt Agreement Administrator will do is to discuss with you your debt levels, the type of debt you have (either secured or unsecured debt), your income and your assets. The reason for these initial questions is that the debt agreement administrator must first establish if you are eligible for a debt agreement. To be eligible for a debt agreement your debt, income and assets must be under the statutory thresholds as set by AFSA. To see if your debt, income and asset levels are below the statutory thresholds click here. If your debt, income and assets exceed these statutory thresholds, then you may need to consider a Personal Insolvency Agreement – click here to learn more about a Personal Insolvency Agreement.

When establishing your debt levels, only unsecured debt is taken into account. So if you have a car lease or a house mortgage (ie a loan secured against property) then that debt is excluded when tallying your total debt for the purposes of the debt threshold limit)

The 2nd step in setting up a Debt Agreement – working out your budget

The 2nd task is to work out a budget for your household to establish how much uncommitted income (ie income left over after household expenses) can be offered to your creditors. Once we work out your uncommitted income we can then estimate a dividend for your creditors. Given Debt Free has been setting up and administering debt agreements since 2006 we have a very good idea on what your creditors will accept as a dividend. Not every creditors will accept the same dividend so setting up a debt agreement must be done on a case by case basis. If we don’t feel your creditors will accept the dividend you can offer then we will advise you before-hand so you can decide if you wish to proceed with trying to set up a debt agreement or you may wish to consider another service like bankruptcy. Our advice is not to start paying any set up fees until you have established your budget and agreed the uncommitted income to paid into your debt agreement.

The 3rd step in setting up a Debt Agreement – prepare for proposal for AFSA

Only after we have worked out your estimated dividend and we feel (from our experience) that your agreement has a good chance of being accepted by your creditors that we will start to collect set up fees.
Once we have collected some set up fees we will then prepare your debt agreement proposal to be lodged with AFSA. Typically we will start preparing your debt agreement proposal after we have collected set up fees for approximately 4 weeks.

The 4th step in setting up a Debt Agreement – lodge your proposal with AFSA

Once your debt agreement proposal has been lodged and accepted for processing by AFSA your creditors cannot continue to call you. AFSA can take up to a week to process your agreement. Once AFSA has accepted it for processing it will be sent to your creditors for voting. At least 50% (calculated in value) of your creditors will need to vote in favour of the agreement. If your proposal is accepted by creditors it will then become legally binding on all parties and you will be obliged to make the payments as agreed (ie pay your uncommitted income into the debt agreement).

The 5th step in setting up a Debt Agreement – the administrator to supervise your agreement

Once accepted by your creditors your debt agreement administrator will start collecting the payments you agreed to make and the administrator will work to ensure that your obligations under the agreement are then meet with each of your creditors individually.
Since you debt agreement administrator will be with you throughout the entire term of debt agreement, you need to choose an administrator that is professional and trustworthy. At Debt Free we have been helping people get out of debt since 2006, so you can be assured we will still be around to help you conclude your debt agreement.

The best way to understand what we can do as a debt agreement administrator and if this is the right debt solution for you is to call us today on our toll free line 1800 98 10 70