What are the Consequences of a Debt agreement?

Entering into a debt agreement is a decision you should take seriously as it will have serious consequences which may impact you, so we recommend that you carefully consider these before proceeding. Firstly proposing a debt agreement is an “act of bankruptcy”, meaning your creditors may use this against you and apply to court to make you bankrupt.

Understanding how a debt agreement works can help determine if it’s the right choice for you.

A debt agreement administrator is someone who manages your agreement. They work with you, and your creditors to ensure a fair outcome for all.

You are obliged throughout your agreement to provide information to your debt agreement administrator and any changes to your situation.

You are able to nominate a debt agreement administrator of your choice when applying for a debt agreement. If you don’t nominate one, you can self administer your own agreement.

If you trade under a business name that isn’t yours, you must disclose the agreement to all people you do business with.

When you complete all your obligations and payments due to be made under your debt agreement you will be released from MOST of your unsecured debts, EXCEPT court fines, student loans (HECS/HELP/SFSS), child support payments and debts you incur after the date your agreement is accepted for processing with AFSA. A debt agreement also does not release another person from a debt jointly owed with you.

This is not the case with secured debts. If you fail to make the required payments to the secured creditor will most likely seize and sell any of your assets which you have offered as security. Common types of secured debts are for houses or cars. For more information see: What debts does a debt agreement cover?

The amount of time your debt agreement appears on the NPII will vary depending on your circumstances, and how your agreement ends. Normally it will only appear for a limited time.

• 5 years from the date the debt agreement was made or
• The date the obligations are complete, whichever is later.

• 5 years from the date the debt agreement starts or
• 2 years from the date of termination, whichever is later.

• 5 years from the date the debt agreement starts or
• 2 years from the date of the court order, whichever is later.

Will appear on the NPII for 1 year from the day that:

• you withdraw the proposal or
• the credit provider refused the proposal or
• the acceptance of your proposal was cancelled or
• the proposal lapsed.