|
What is a debt agreement?
A debt agreement, or Part IX agreement, is a more flexible alternative offered to individuals as an alternative to filing bankruptcy. This debt agreement is legally binding between creditors and their debtors. Entering into debt agreements can be beneficial to both creditors and debtors. It allows the debtor time to take care of their debt and possibly lower the debt amount without severely impacting their life by filing bankruptcy and this allows for the creditor to recover most, if not all, of the amount of the money owed to them by insolvent debtors.
A debt agreement can only be entered into by individuals who are insolvent, meaning they are unable to pay their bills when they are due. Without meeting this requirement, a debt agreement will not be issued in order to maintain the confidence and belief in such a system. Debtors who wish to enter into these agreements, such as a Part X Agreement, must also not have filed bankruptcy in the past ten years, have tax income of less than $61,875.45, and a unsecured debt less than $82,500.60. Assets must also not exceed $82,500.60. For a Part IX Agreement, income cannot exceed $54,286.05 and debt cannot exceed $72,381.40. The same applies to assets. They cannot exceed $72,381.40
Part IX agreements are proposals made to creditors by the debtor in order to allow to debtor to take care of their debts within the parameters, which are more manageable for the debtors to handle. The proposals offered to the creditors must be sustainable and manageable and are based on the debtor's current circumstances, expenses, and means of income. The Insolvency and Trustee Service of Australia or ITSA, reviews the proposals made by the debtor to ensure they are viable proposals which meet the requirements of debt agreement proposals. The creditors are then presented with the proposals and they vote to accept or deny the proposal at a public meeting between the creditors, the debtor, and the debtor's trustee.
The type of proposals can include a payment plan or lump sum payments, and these payments include a payment in a lesser amount than the creditor had originally been seeking. The proposal is then entered into the National Personal Insolvency Index (NPII) to ensure that the creditors and debtors maintain the agreement which is reached under the debt agreement. Once the NPII is entered into the system, interest will no longer accrue on the debts, and the debtor is responsible for any debt after that point. The debtor also cannot add any new debts to the NPII. Any listing in the NPII lasts for life, so a name can never be removed from this system.
There is a useful article on debt agreements at Finance Comparison.
Other Question Categories
Sponsored Links
|
|
 More Personal Loans...
|
Credit Card Comparison