Whilst a Debt Agreement is an alternative to bankruptcy and has many advantages compared to bankruptcy you need to be aware that they don’t deal with all debts.
A Debt Agreement will only allow you to settle certain unsecured debts. So if you have assets which you wish to keep and they are attached to secured loans then these loans will need to be paid in the ordinary course. For example if you have a car or a house which is subject to a secured loan and you wish to retain these assets then you will need to continue to pay these loans. However, one of the major benefits of a Debt Agreement is that as long as you keep up with your secured loan repayments, the underlying asset will be protected from your unsecured creditors.
Click here to read more about the differences between secured and unsecured debts.
So if a Debt Agreement only allows you to settle unsecured debts, which unsecured debts can be included?  In short, only provable debts in bankruptcy can be included. To fully explain what is a provable debt in bankruptcy is beyond the scope of this article, but the most common types of provable debts are listed below:

  • Accounting & or legal fees;
  • Credit cards or store cards;
  • Centrelink debts (unless it was incurred by fraud);
  • Overdrawn bank balances (ie overdraft or overdrawn savings account)
  • Personal loans, or business loans (if you have personally guaranteed them);
  • Trade creditors (if you have personally guaranteed them);
  • Medical fees;
  • Mortgage insurance premiums;
  • Pawn shop & or Pay Day lenders;
  • Rent;
  • Secured creditor shortfalls;
  • Taxes;
  • Utilities (like electricity, gas, telephone (including mobile), internet & pay TV).

You cannot include non-provable debts in a Debt Agreement. The most common types of non-provable debts are listed below:

  • Any amount payable under the proceeds of crime laws;
  • Abortive writs, collection agents expenses;
  • Centrelink debts incurred by fraud;
  • Child support (if the agreement has been registered with the child support agency);
  • Council, strata levies & water rates;
  • Debts incurred by fraud;
  • Penalties and fines imposed by a Court;
  • HECS debts;
  • Unliquidated damages;
  • Student Loans;
  • Unenforceable laws.

If you want to discuss in more detail what debts can be included in a Debt Agreement then call our friendly Personal Debt Consultants in our toll free number 1800 676 598.