Part IX debt agreements

A Part IX debt agreement is a legally binding arrangement that can be entered into with affected creditors.  It is an administration under the Bankruptcy Act 1966 and is an alternative to bankruptcy for individuals not wishing to become bankrupt.

The debt agreement process

Once a debt agreement proposal is compiled and signed, it needs to be lodged with the Australian Financial Security Authority (AFSA).  AFSA will then forward the proposal to debt agreement creditors asking them to vote by the nominated deadline date (the voting period is generally five weeks).


Once the deadline date for voting expires, AFSA collate the votes received.  In order for the proposal to be accepted, a majority in dollar value of creditors voting needs to be achieved.  If the debt agreement is accepted you are then bound to the terms of the proposal.


In the event that the proposal is rejected by AFSA, your creditors, or the proposal lapses (no one votes on the proposal) you will be notified of the outcome from AFSA.

Who can do a debt agreement?

  • A person who is insolvent (unable to pay their debts when they become due and payable) can submit a debt agreement proposal.

  • A person who has not been in a debt agreement, filed for bankruptcy or been subject to a personal insolvency agreement within the last ten years.

  • A person with unsecured debts less than the current prescribed liability threshold of $123,578.00

  • A person with after tax income less than the current prescribed income threshold of $92,683.50

  • A person with net assets less than the current prescribed asset threshold of $247,156.00

Important information

  • A debt agreement is not a loan or a form of borrowing money to pay your debts

  • A debt agreement can only include provable debts for which you are personally liable for

Benefits of entering into a debt agreement

The benefits of a Part IX debt agreement are:

- Interest and charges become frozen on debt agreement debts (note: you will not be able to continue using credit cards / credit facilities that are part of the debt agreement

- A creditor cannot enforce recovery action against you in relation to a debt subject to the debt agreement

- A single payment is made into the debt agreement rather than multiple payments to multiple creditors

  Payments made under the debt agreement are based on what you can afford to pay rather than what is being demanded by debt agreement creditors.  It is important to note that a debt agreement is NOT a consolidation loan.

Consequences of entering into a debt agreement

  • A debt agreement is an act of Bankruptcy

  • A notation will appear on your credit file making it difficult to obtain further credit 

  • A notation will be recorded on the National Personal Insolvency Index