A Part 9 debt agreement is a legally binding arrangement under Australia’s Bankruptcy Act 1966 that lets you repay part of what you owe over a fixed period instead of declaring bankruptcy. To use one, your unsecured debts, divisible property, and after-tax income must each sit below thresholds that the Australian Financial Security Authority (AFSA) updates twice a year, and you must be genuinely insolvent. Once creditors accept the proposal, it binds every unsecured creditor, freezes most collection action, and stays on public record for years.
Who Can Propose One
Section 185C of the Bankruptcy Act sets three financial ceilings you must fall under. AFSA reindexes them every March and September, so confirm the current figures before relying on them. The indexed amounts are:
- Unsecured debts of no more than $150,950.80
- Divisible property worth no more than $301,901.60 (property a trustee could sell if you were bankrupt)
- After-tax income of no more than $113,213.10 a year1Australian Financial Security Authority. Indexed Amounts
You also need a clean insolvency history for the past ten years. You cannot propose a debt agreement if, in that window, you have been bankrupt, been party to another debt agreement, or signed a controlling trustee authority under Part X. The ten years runs from different points depending on the earlier event: the end of a bankruptcy, the completion or termination of a prior debt agreement, or the date you signed a Part X authority.2Australian Financial Security Authority. Debt Agreements
And you must actually be insolvent, meaning you cannot pay your debts as they fall due. A debt agreement is not open to someone who simply prefers to pay less.
Which Debts It Covers, and Which It Doesn’t
The agreement captures most unsecured debts: credit and store cards, unsecured personal loans, payday loans, utility bills, phone and internet accounts, overdrawn bank accounts, unpaid rent, and medical or professional fees.3Australian Financial Security Authority. What Debts Does a Debt Agreement Cover?
Some debts are provable but survive the agreement. Child support obligations fall here: the creditor can vote and receive payments, but you still owe the full amount once the agreement ends. Debts arising from fraud work the same way.2Australian Financial Security Authority. Debt Agreements
Other debts are non-provable, meaning the creditor cannot vote or receive anything from the agreement and you keep paying them separately. HECS-HELP balances and court-imposed fines both sit in this category. You still have to disclose them on the proposal even though they aren’t part of the payment plan.
Secured debts like mortgages and car loans are outside the agreement entirely. The lender keeps every right it has, including repossession, but you can usually hold on to the asset as long as you maintain the payments. Owning your home doesn’t disqualify you; in fact, it can lengthen the maximum term.
One consequence people miss: a debt agreement does nothing for anyone who co-signed or guaranteed one of your debts. Creditors can pursue that person for the full balance even while collection against you is frozen.
How the Proposal Is Made and Approved
You can’t lodge on your own. The Act requires you to work with a Registered Debt Agreement Administrator approved by AFSA. The administrator prepares the proposal, lodges it, manages the agreement if creditors accept, and collects and distributes your payments.2Australian Financial Security Authority. Debt Agreements
The proposal has to disclose your full financial position: every asset, every debt (including non-provable ones), your income, and the payment terms you’re offering. Each creditor’s name, address, and balance is verified from recent statements. Your administrator lodges the proposal with AFSA along with a $200 lodgment fee.4Australian Financial Security Authority. Fees and Charges The Official Receiver reviews it, records it on the National Personal Insolvency Index (NPII), and sends it to creditors for a vote. From the moment it’s recorded, most creditors cannot enforce against you while the vote is pending.
Creditors have 35 days to vote. The result is decided by a majority in dollar value among creditors who actually vote, not a headcount. A creditor holding $10,000 who votes yes beats two creditors holding $2,000 each who vote no. Creditors who don’t vote aren’t counted, and the administrator and related parties can’t vote at all.2Australian Financial Security Authority. Debt Agreements
If it passes, the agreement binds every unsecured creditor, including those who voted no or didn’t vote, and the administrator starts collecting and distributing payments. If it fails, creditors can resume collection. You can try again with a revised offer, but you’ll pay another lodgment fee and go through the whole process again.
What the Payments Actually Buy
Administrator fees come out of the money you pay in, and their structure must be disclosed in the proposal and approved by creditors as part of the vote. AFSA prohibits flat monthly charges unrelated to actual work performed.5Australian Financial Security Authority. Expenses That an Administrator Can Recover in a Debt Agreement On top of that, the government takes a 7% realisations charge on every payment received.6Australian Financial Security Authority. Collection of Realisations and Interest Charges Between the two, the amount that actually reaches creditors is noticeably less than what leaves your account. Ask your administrator to walk through the split before you sign.
How Long It Runs and Changing It Later
A debt agreement can run for up to three years, or up to five years if you own your home. A substantial and unforeseen change in circumstances can also extend it to five years without home ownership in limited cases.7Australian Financial Security Authority. What Is a Debt Agreement?
If your income drops or your costs rise, you can propose a variation. Only you (or in limited cases an affected creditor) can lodge one. The administrator has to certify that you can meet the new terms, and creditors vote again on the same 35-day timetable. A variation can’t push the agreement past the maximum duration.2Australian Financial Security Authority. Debt Agreements
What Default Costs You
Missing payments carries escalating consequences. If you fall behind and haven’t caught up within three months, your administrator may have to report the default to creditors. Miss six consecutive months, or fail to complete all payments within six months of the end date, and the agreement terminates automatically by law.8Australian Financial Security Authority. I’m Having Trouble Paying My Debt Agreement
Termination is the worst outcome short of bankruptcy. Creditors can resume collection for the full amount owed, including interest that may be backdated to the start of the agreement. The protection you had is gone. Creditors can also apply to the court to make you bankrupt. And you’re locked out of proposing another debt agreement for ten years from the termination date.2Australian Financial Security Authority. Debt Agreements
If payments are getting hard, contact your administrator before you slide into default. A variation is a much better result than termination.
The Credit and Public Record Footprint
A Part 9 agreement shows up on both your credit report and the NPII. For a completed agreement, the NPII record comes off five years from either the date the agreement was made or the date it was completed, whichever is later. If it was terminated instead, the record stays for five years from the agreement date or two years from termination, whichever is later. A proposal that’s lodged but withdrawn, rejected, or lapses without acceptance comes off within a year.9Australian Financial Security Authority. The National Personal Insolvency Index
Expect borrowing to be difficult for at least five years. Most lenders treat a debt agreement much like bankruptcy when assessing applications.
What Happens When You Finish
Complete every required payment and most of the covered debts are released. What survives is what was always going to survive: child support, fraud-related debts, HECS-HELP balances, and court fines.10Australian Financial Security Authority. What Happens After My Agreement Ends? The NPII record doesn’t disappear the day you finish; it runs out on the timeframes above. A completed agreement does at least show future lenders that you honoured the arrangement, which is worth something when you eventually apply for credit again.
Other Options Worth Comparing
A debt agreement is one of several formal routes under the Bankruptcy Act. Before you commit, weigh it against the alternatives:7Australian Financial Security Authority. What Is a Debt Agreement?
- Temporary debt protection gives you a 21-day freeze on creditor enforcement while you decide your next step. It doesn’t reduce what you owe.
- A personal insolvency agreement under Part X is more flexible than a Part 9, has no set financial thresholds, and requires appointing a controlling trustee. It’s typically used for larger or more complex situations.
- Bankruptcy usually lasts three years and one day. Non-exempt assets can be sold, income above a threshold goes to creditors, and most debts are discharged at the end, but the long-term hit to credit and some employment is heavier.
- Informal arrangements with individual creditors carry no public record, but they aren’t enforceable if a creditor changes their mind.
The National Debt Helpline (1800 007 007) offers free, independent financial counselling and is a sensible first call before engaging a paid administrator.