The Australian Government introduced legislation to help Australians get out of debt with a formal creditor arrangement. The legislation is contained within Part IX and Part X of the Bankruptcy Act.
The legislation was first introduced in 1966 under Part X of the Bankruptcy Act. As the law stood in 1966 there were three (3) individual arrangements to choose from being:
- deeds of assignment,
- deeds of arrangement; and
These arrangements were unnecessarily complicated and expensive to set-up so the law was streamlined and simplified in 2004. The three (3) arrangements (as listed above) were replaced in 2004 with a more simplified process known as “Personal Insolvency Agreements“.
After introducing the Part X legislation in 1966, the Australian Government realised that the three (3) individual arrangements under Part X of the Bankruptcy Act were expensive and complicated to set up (as they required the services of a fully licenced and registered Trustee in Bankruptcy), so in an effort to make formal creditor arrangements more affordable for lower income earners (with lower debt levels), the Government introduced Part IX of the Bankruptcy Act. The new creditor arrangement for low income earners (with lower debt levels) was legislated in 1996. The government named these as Debt Agreements.
Choosing which agreement to enter into will depend on your available assets, income and unsecured debt levels as explained below:
|Which creditor arrangement?|
|Income (after tax) less than $88,547.55||Part IX – Debt Agreement|
|Income (after tax) more than $88,547.55||Part X – Personal Insolvency Agreement|
|Assets (equity in assets) less than $236,126.80||Part IX – Debt Agreement|
|Assets (equity in assets) more than $236,126.80||Part X – Personal Insolvency Agreement|
|Unsecured creditors less than $236,126.80||Part IX – Debt Agreement|
|Unsecured creditors more than $236,126.80||Part X – Personal Insolvency Agreement|
Click here to learn more about the differences between a Debt Agreement & a Personal Insolvency Agreement.
If you are in need of advice on a formal creditor arrangement to help you get out of debt, then call today and speak to a personal debt consultant on 1800 676 598.