Part IX / Debt Agreements

WHAT ARE PART IX DEBT AGREEMENTS?

A Part IX Debt Agreement is a simple method for debtors to negotiate a binding compromise with their creditors. Debt agreements represent a low cost flexible alternative to bankruptcy.
It involves a person in debt proposing a deal with their creditors. The debt agreement proposal may be accepted or rejected by creditors. The Insolvency and Trustee Service Australia, handles the voting process. A proposal is accepted if a majority of creditors with 75% of the value of debts vote in favour of the deal. All creditors with provable debts are bound – even those who voted against the proposal.
Debt Agreements are negotiated compromises. Some examples of the kinds of deals put in place are:

Payment of less than the full amount of all or any of the debtor’s debts
A moratorium on payment of debts
A transfer of property from the debtor to one or more creditors in full or part payment
Periodic payments of amounts out of the debtor’s income to creditors either collectively or individually

WHO CAN ENTER INTO A PART IX DEBT AGREEMENT?

A debt agreement can be proposed by a debtor who has -

Not been bankrupt, utilised a debt agreement or given an authority under Part X of the Bankruptcy Act in the last 10 years
After tax income less an indexed maximum.
Unsecured debts of less than an indexed maximum.
Property not exempt under bankruptcy valued at less than an indexed maximum.

The current indexed amounts can be found at: