Informal Debt Agreements

Get back on your feet with fewer consequences

If you find yourself in debt after an unexpected change in your circumstances, such as separation, redundancy, or a sudden (and expensive) illness or accident, there is a way out that offers fewer formal consequences than other debt solutions – an Informal Debt Agreement may be just right for you.

What is an Informal Debt Agreement?

An Informal Debt Agreement is a legally binding agreement between yourself and your creditors negotiating personalised terms to help you manage and pay back your debts. They come with fewer consequences than other more formal debt relief options such as Part 9 Debt Agreements or Part 10 Debt Agreements (Personal Insolvency Agreements).

How can an Informal Debt Agreement help me?

In an Informal Debt Agreement, we help you negotiate repayment terms that are suitable to you and your creditors. In these agreements, we often negotiate:

  • to freeze your interest
  • reduce or remove fees such as overdue and late payment fees
  • a settlement period and repayment rate that is affordable.

In some circumstances, we may even be able to negotiate to reduce the debt owed.

Is an Informal Debt Agreement right for me?

Whether an Informal Agreement is right for you will depend on your personal circumstances. Informal Debt Agreements are ideal in situations where you suddenly find yourself in a small amount of debt due to a change in your life circumstances. They’re suitable as a short-term debt solution or in situations where a formal solution might negatively impact your ability to keep your job.

When is an Informal Debt Agreement a good idea?

Situations in which an Informal Debt Agreement might be suitable are:

  • Loss of employment
  • Sudden illness or injury
  • An unexpected change in your personal circumstances, such as being separated or getting a divorce.

What types of debts can be handled with an Informal Debt Agreement?

Informal Debt Agreements can assist you with a range of debts including secured debts such as car loans, and unsecured debts such as credit cards, personal loans, and government debts, for example, utilities and telecommunications bills, medical bills, speeding fines and even tax liabilities.

What are the advantages of an Informal Debt Agreement?

Unlike formal Debt Agreements, Informal Agreements don’t have any limitations on them. They don’t come with negative impacts on your credit rating (they aren’t formally recorded in your credit file) and they aren’t publicly noted on the National Personal Insolvency Index (NPII) as they don’t fall under the Bankruptcy Act.

Other benefits are that they:

  • stop debt collection calls
  • could freeze debt related interest and fees
  • don’t impact your ability to manage a business or be a Company Director
  • don’t have to include all your creditors.

You do need to stick to the agreement and make your repayments on time to receive the benefit of having one. Should you default on your payments, your creditors can and will commence their process of debt collection.

What are the downsides of an Informal Debt Arrangement?

An Informal Debt Arrangement is not regulated by Australian Legislation, which means that creditors are able to change your terms during the agreement, they may want to renegotiate regularly and there are no standardised terms which are legally required. You may find it hard or almost impossible to persuade your creditors to enter into an Informal Agreement with you.

Does an Informal Debt Agreement hurt your credit rating?

Whether an Informal Debt Agreement impacts your credit rating or not will depend entirely on your creditor and whether they choose to record your informal arrangement with the credit reporting agencies or not.

What are the alternatives to an Informal Debt Agreement?

Depending on your personal circumstances, an Informal Debt Agreement may not be the most suitable debt relief option for you. Alternative solutions may include:

  • Debt Consolidation
  • Home Loan Refinancing
  • Formal Debt Agreements (Part 9 or Part 10).

Speak to our team and let us help you assess what the best options are for you.

How do I apply for an Informal Debt Arrangement?

Although you could approach your creditors directly and ask if they’d be willing to enter into an Informal Debt Arrangement with you, we don’t generally recommend it. Using an experienced and well-connected Debt Negotiator who has a clear understanding of the law and what is required to make an Informal Agreement successful is highly recommended. At Debt Negotiators, we have the connections, experience and knowledge needed to help you develop and propose a successful Informal Debt Agreement. We also have the expertise to help you assess your options so you choose the best debt solution for your current financial situation.

How much will a debt payment plan cost me?

The cost of a debt payment plan will depend on the details and support included in your debt payment plan. For example, negotiating a payment plan with five lenders will cost less than negotiating a payment plan for ten debts. Contact us to discuss your payment plan needs and we’ll be able to give you some indicative pricing.

Talk to the Debt Negotiation Specialists

Our team are trained to put your best interests forward when assessing and analysing your current debt predicament and potential solutions to help you get out of debt and stay out. We’ll help you put together a debt management plan which includes a debt payment plan.

How can Debt Negotiators help me with Informal Debt Agreements in Australia?

Debt Negotiators offers debt management support and guidance Australia-wide. As registered Administrators and Trustees for Debt Agreements and Personal Insolvency, we have the tools, knowledge and experience needed to help you negotiate favourable terms with your creditors (if possible).

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