If you are unable to repay your debts on time, a Debt Agreement could be a positive step towards becoming debt free. Unfortunately, there are some downsides and for that reason, you need to carefully review the consequences of entering into a Debt Agreement before proceeding.
So you are presented with a balanced view, we list the advantages and disadvantages of entering into a Debt Agreement.


  • Any current or pending legal action to recover your debts will be suspended once your proposal is lodged and accepted for processing by AFSA. If your Debt Agreement is subsequently accepted by creditors, the legal action will be cancelled.
  • Secured creditors will not be affected, so you will be able to keep your financed assets (like your car and house) as long as you keep these payments up to date.
  • There are less restrictions placed on you (compared to bankruptcy) , so you will be free to travel overseas.
  • Your repayments will be based on what you can afford and not based on what your creditors may be demanding. The repayments will be affordable and flexible so you will be able to meet your existing financial commitments (i.e. car leases and house mortgages). You will benefit from one regular repayment, which will cover all creditors and this payment will be matched to your payroll cycle (i.e. if you get paid weekly we will make the repayments weekly).


  • Your personal details and information will be recorded on the National Personal Insolvency Index. AFSA the government agency who manages the NPII database shares that information with the credit reporting agencies.
  • The fact that you have entered into a formal arrangement with your creditors will be recorded on commercial credit reporting databases for a minimum of 5 years (unless if the agreement runs longer than 5 years) (this time period will run from the time that you enter into such an arrangement). After a minimum of 5 years (unless if the agreement runs longer than 5 years),  the listing will be removed from your credit file and will not show up any searches (unless people search the NPII directly which is a separate government database). The most common question people ask is:

“Can I get a loan after my debt agreement is completed?”

Given most Debt Agreements run for between 3 to 5 years there will be a short period of time after your agreement where it may be a little more difficult than usual to get credit. Many clients we have helped have been able to get new credit after successfully completing their debt agreement but unfortunately it will be up the financial institution at the time to assess your application.
If you are having a hard time managing your unsecured debt and you are in true need, the advantages of a Debt Agreement may outweigh the disadvantages.  The most important thing is that you have been made aware of the disadvantages and you have carefully considered these consequences.
If you are thinking about a Debt Agreement, call us today and speak to our friendly but very professional debt consultants. Call now on our toll free advice line 1800 676 598