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What is a Debt Agreement?
A Debt Agreement (also known as a Part IX Debt Agreement) is a formal, legally binding arrangement under the Bankruptcy Act between you and your unsecured creditors.
It allows eligible individuals to repay an affordable fixed amount over a set period, based on what they can reasonably afford — not the total amount owed. Once accepted, creditors are bound by the agreement and must comply with its terms.
Debt Agreements are regulated by the Australian Financial Security Authority (AFSA) and are designed as an alternative to bankruptcy.
How Debt Agreements work
A Debt Agreement proposal is assessed, reviewed, and voted on by creditors. If the required majority accept the proposal, it becomes legally binding on all listed creditors.
Once active:
- Repayments are fixed and predictable
- Interest, fees, and charges on included debts are paused
- Creditors can no longer pursue separate collection action
At Clear My Debts, we help you understand whether a Debt Agreement may be appropriate, explain how the process works, and guide you through the assessment and preparation stages — so you can make an informed decision before proceeding.
Potential benefits of a Debt Agreement
For the right person, a Debt Agreement can provide meaningful relief, including:
- Repaying what you can afford, rather than the full balance
- Pausing interest, fees, and charges on included debts
- Protection from ongoing unsecured creditor action
- A defined timeframe to resolve your debts
- A structured alternative to bankruptcy
Important things to consider
Debt Agreements are formal insolvency arrangements and may not suit everyone.
You should be aware that:
- A Debt Agreement is recorded on your credit file for at least 5 years
- Your details are listed on the National Personal Insolvency Index (NPII)
- You may be restricted from accessing new credit during the agreement
- Proposing a Debt Agreement is considered an “act of bankruptcy” (though it is not bankruptcy itself)
Because of these implications, careful assessment is essential.
How Clear My Debts supports you
We focus on clarity before commitment.
We help you:
- Assess whether a Debt Agreement is suitable for your circumstances
- Understand eligibility requirements and consequences
- Compare Debt Agreements with alternative options
- Prepare financially and practically for the process
- Coordinate next steps with appropriately authorised professionals where required
Our role is to ensure you don’t rush into a formal solution without fully understanding your options.