Debt Agreement Q&A

This article answers a lot of common questions about debt agreements.

At Get Debt Free, we are often asked many similar questions about debt agreements and how they can help people get out of debt. We wanted to provide a little more information to our visitors of this site to help them get a basic understanding of how debt agreements work in Australia. For more info on this subject, view our debt agreements page.

Please keep in mind that applying for a debt agreement is a complicated process based on individual circumstances so we can only provide general information here. The best option is to discuss a debt agreement with our debt consultants who are personal debt specialists. We offer free advice that is tailored to individual circumstances. You can call us on 1800 98 10 70. In the meantime, please read on to learn a little more about debt agreements.

What is a Debt Agreement?

A Debt Agreement is a legally binding, flexible agreement made between your creditors as an alternative option to bankruptcy.

A debtor will negotiate with their creditors, usually through a Registered Debt Agreement Administrator (RDAA), to settle their debts. Usually this is for less than what the debtor owes the creditors. Once approved by creditors the agreement becomes legally binding under Australian Law on all parties.

Who can enter a Debt Agreement

There are some limitations as to who can enter into a debt agreement. These are:

  • If you have been bankrupt or have entered into a previous debt agreement during the past ten years then you cannot enter into a debt agreement.
  • Your income must be less than the current income level as published by AFSA and adjusted by CPI
  • Your outstanding or unsecured debts must be less than the current debt threshold as published by AFSA and adjusted by CPI
  • Your property must be less than the current property threshold as published by AFSA and adjusted by CPI
  • You must be personally insolvent

If you are unsure how these conditions are applied please call today so we can assess your individual circumstances. Remember each debt agreement proposal is different and are all tailored to your financial circumstances. Call today on 1800 98 10 70 to see if we can help you discover your options. If your circumstances are different please call us as you may qualify for another product or service.

How does it Work?

If you feel you are eligible for a debt agreement it is best that you consult with a Registered Debt Agreement Administrator who are qualified to submit your proposal to AFSA for processing. Personal Insolvency can be complicated and for that reason we recommend that you only deal with a qualified personal insolvency expert. At Debt Free our debt consultants are trained and supervised by a Registered Trustee in Bankruptcy who is also a fully qualified Chartered Accountant. Our debt consultants are highly experienced to handle all personal insolvency cases. Debt Free have been supervising debt agreements since 2006 and have helped hundred of Australians.

Once we have formulated your debt agreement proposal we will submit it for processing with AFSA. After that Creditors will have approximately 35 days to votes on the proposal. If it is accepted it will become a legally bound agreement.

We can help you work out a proposal that is both acceptable to you and your creditors. We will make the entire process as simple as possible.

What if I break the Agreement?

The agreement is legally binding. If you do not honour the terms you agreed then creditors may terminate it, which may lead to bankruptcy.

Can I change a Debt Agreement?

If your circumstances change, you do have the option of putting forward variation to your debt agreement. These changes must go through the same voting process that the original debt agreement did. If accepted, these changes will then become legally binding to your creditors.

How is a Debt Agreement different to bankruptcy?

A debt agreement is an alternative debt solution to bankruptcy. For a debtor, it may be a preferable solution as it involves less restrictions being put in place, ie overseas travel and property ownership.

After declaring bankruptcy, a debtor will have restrictions placed on travel and ownership of property. A debt agreement does not imposed these restrictions.