There are many alternatives to bankruptcy, with a Debt Agreement being one of them. A Debt Agreement is a legally binding agreement you can reach with your creditors if you can no longer afford to repay the debt. The outlines of this agreement can be found under Part IX of the Bankruptcy Act 1966 in Australia.
Not everyone can apply for a Debt Agreement. Only people who have been struggling with debt for some time can enter into a Debt Agreement. A Debt Agreement is essentially 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.
- How do I know if I am eligible for a debt agreement?
- You are able to make a proposal for a Debt Agreement if you meet the following criteria:
- You are unable to repay debts when they fall due (insolvency testing)
- You haven’t been bankrupt, filed for a debt agreement or personal insolvency agreement for the last ten years
- Your estimated after-tax income for the next 12 months to be less than the set amount
If you are exploring your personal debt solutions such as a Debt Agreement and would like to speak to a professional to learn more about them, then please contact Debt Free Australia. We offer a FREE initial consultation so that you can get unbiased, expert advice on which one is right for you. Our toll-free hotline operates 24/7 so you can call us at your own convenience on 1800 676 598.