What is a Debt Agreement?
A Debt Agreement is binding agreement between you and your creditors where they agree to accept a sum of money which you can afford.
How will a Debt Agreement help me?
It will allow you to deal with unmanageable debts by freezing your provable unsecured debts and any Interest so you can repay your creditors over an extended period of time in an affordable and practical way.
What are unsecured debts?
Unsecured debts are debts which have NO security attached to them. This includes personal loans, credit cards, bills, tax debts. A Home Loan or a Car Loan ARE NOT unsecured debts.
Do I have to disclose all Debts?
Yes, all Debts have to be disclosed this includes both you secured debts, unsecured provable debts, leases, hire purchases and any rentals. A Debt Agreement will only deal with unsecured provable debts.
Do I have to disclose all my Income?
Yes, all income that you receive such as all paid employment, CentreLink, Child Support, income from investments and any interest earned.
Who can propose a Debt Agreement?
You can propose a Debt Agreement if you are Insolvent (you cannot pay your Debts as they fall due).
Have not been Bankrupt or had a Debt Agreement, or been party to a Part X of the bankruptcy Act in the past 10 years.
Have Unsecured Debts, Assets and after Tax Income for the next 12 months all less than the threshold limits
Will I be bankrupt if I propose a Debt Agreement?
No, a Debt Agreement is the alternate to bankruptcy. However doing a Debt Agreement you commit an act of bankruptcy.
What are the consequences of doing a Debt Agreement?
You commit and Act of Bankruptcy.
Your name will appear on the National Personal Insolvency Index which is a public record.
Listed with credit reporting agencies for up to 7 years which will affect your ability to obtain credit.
Secured Creditors (e.g. Car Loan) may sell your assets (e.g. Car) if you default on payments to them.
You cannot obtain credit solely or jointly without disclosing that you are party to a Debt Agreement.
You cannot carry on business under an assumed name without disclosing to all people you deal with that you are party to a Debt Agreement
Can my creditors reject my Debt Agreement Proposal?
Yes, creditors have the right to reject your Debt Agreement Proposal. It is important to make a full disclosure of your current Income, Debts and Asset. There is no guarantee that creditors will accept your proposal.
What happens if my proposal is rejected?
If your Debt Agreement is rejected, it is possible to resubmit a new proposal. Usually creditors will consider a possible resubmission if additional information comes to light or there is added benefits to creditors to reconsider a new proposal.
How does my Debt Agreement get accepted?
Your Debt Agreement Proposal gets accepted if majority dollar value of creditor’s votes in favour of you Debt Agreement Proposal. This means that over 50.01% of the dollar value vote in favour of the Debt Agreement proposal.
What is the process of doing a Debt Agreement?
Must read the prescribed information along with this frequently asked question and Debt Agreement Pamphlet and understand the alternatives with dealing with your debts. The Debt Agreement is lodged with ITSA (Insolvency Trustee Services Australia; a government department).
ITSA sends your proposal to creditors for voting.
Creditors vote on your proposal within 35 working days of ITSA accepting the proposal.
ITSA checks and counts the votes and the outcome is notified to you in writing of the outcome.
Does ITSA have to accept my proposal?
No, the ITSA can reject your proposal if they believe that a Debt Agreement is not the best option for you, in the best interest of your creditors or find you ineligible to lodge a Debt Agreement.
Do I have to pay Debt Negotiators a fee for lodging my Debt Agreement?
Yes, there is an up-front fee before the Debt Agreement is accepted for processing. There is also an administration fee included in your minimum monthly payments.
Do I get a refund if my proposal is rejected?
No, if your proposal is rejected by your creditors, Debt Negotiators will stop scheduled payments immediately. Debt Negotiators will only refund where ITSA rejects the Debt Agreement for processing because Debt Negotiators was at fault.
What happens when my Debt Agreement is accepted by my creditors?
All your unsecured creditors will be bound by the Debt Agreement. This means any or intended collection action, legal action will cease. Your creditors will be paid under the Debt Agreement.
Do I have to pay my creditors once my Debt Agreement is accepted?
No, your creditors will be paid through the Debt Agreement. They will receive Dividend payments from Debt Negotiators as scheduled by your proposal