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: