Your Pocket-Size Guide to Debt Agreement

Track records are kept by finance companies in aims to helping Australians solve their debt problems with avoiding bankruptcy and successfully settling their unaffordable debt through a Debt Agreement.

To help you understand what is a Debt Agreement we have provided a pocketsize summary below.  Please take a few minutes to carefully understand what Debt Agreement entails.

Quick Guide – Do I qualify for a Debt Agreement?

•    You are considered insolvent (unable to pay your debts as and when they fall due); and

•    Have unsecured debts more than < $100,664.20; or

•    Have equity in assets more than < $100,664.20; or

•    Regularly employed but annual income is more than <$75,498.15 or approximately < $103,163.00 (before tax for Australian residents)

If any aspect is unclear please call our friendly staff on our toll free number 1800 676 598.

What is a Debt Agreement?

A Debt Agreement is an agreement you can reach with your creditors if you can no longer afford to repay the debt.  Only people who have been struggling with debt for some time can enter into a Debt Agreement. A Debt Agreement is basically an arrangement with your creditors to pay an agreed amount over a period of time (usually this ranges from 3 to 5 years). In most cases you can settle your debts for less than what is owed and the balance will be legally written off.

A Debt Agreement is regulated under the Bankruptcy Act so it is a formal agreement and as such it must be supervised by a Registered Debt Agreement Administrator.  Many people think that because it is regulated under the Bankruptcy Act, it is bankruptcy, but it should never be confused as bankruptcy. A Debt Agreement is a legal alternative to bankruptcy.

How do I set up a Debt Agreement? 

To set up a Debt Agreement, it is necessary that you select a Registered Debt Agreement Administrator (RDAA).  A Registered Debt Agreement Administrator is usually a person who has a minimum level of accountancy qualifications and relevant experience in the industry.

The RDAA will register the Debt Agreement Proposal on your behalf with ITSA.  The Debt Agreement Proposal will contain a summary of your financial affairs and also contain your proposal to settle your debts.  The RDAA must certify that the proposal is sustainable and affordable. After the proposal has been lodged with ITSA, ITSA will then circulate the proposal to your creditors and they will have 20 working days to vote on it. For the proposal to be accepted, creditors holding 50% in value of the debt must approve it. So for example if you have $100,000 in debt, creditors holding $50,000 must approve it.

If you meet this voting criteria then all other creditors (whether they voted or not) will be bound by the Debt Agreement.

Who should I deal with and trust to set up a Debt Agreement?

You should only deal with a Registered Debt Agreement Administrator (RDAA).

 With companies such as Debt Free Australia, they have a Registered Debt Agreement Administrator and we can help you set up a Debt Agreement. In fact, there is no charge until you have been fully qualified as being eligible for a Debt Agreement.  

Call an expert today at Debt Free Australia for professional advice, tailored to suit your needs and circumstances on 1800 676 598, or visit http://www.debtfreeaustralia.com.au