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PART IX DEBT AGREEMENTS

Debt Agreements were introduced by the Commonwealth Government as an alternative to bankruptcy. They provide an opportunity for you to consolidate all your unsecured debt into one amount and then make an offer to repay what you can afford.

Instead of paying all your creditors individually, you make just one, interest-free payment to a Registered Debt Agreement Administrator who then forwards payments to each creditor as outlined in the Agreement. Your creditors vote whether they will accept your proposal and if a majority agrees, then the Agreement is legally binding on all your creditors.

Entering into a Debt Agreement will have some consequences, but not all the consequences of bankruptcy. For example, you can keep assets up to a limit (currently $94,530.80*) that could not be kept if you were bankrupt.

HOW A DEBT AGREEMENT IS SET UP

There are two stages involved with a Debt Agreement:

* The initial consultation and document preparation

* The lodgement and administration of an Agreement

The first stage of a Debt Agreement involves dealing with a consultant from Agreement Consulting Services. Your current situation will be reviewed and your options advised. When a Debt Agreement is suitable, and is in your best interest, the necessary paperwork is completed. This includes a “Statement of Affairs”, “Proposal” and “Explanatory Statement”. A budget is prepared to show that your repayments are manageable.

Your file is then reviewed and sent to you to check and sign. Once returned to us, it is ready for the next stage.

The second stage is when the completed and signed Debt Agreement paperwork is given to a Registered Debt Agreement Administrator—Penny Doube (ITSA RDAA1006). All the information is checked again and then lodged with the Australian Government’s Insolvency and Trustee Service Australia (ITSA).

From when ITSA accept your proposal for processing, your debts are frozen for a period of 5 weeks. During this time, all interest, charges and penalties on your unsecured debts is stopped. Each creditor is invited to vote on whether to accept or reject your proposal. No legal action concerning those debts can be enforced during this period.

When ITSA receive the documents, they will write to you and to your creditors to advise your Debt Agreement Number. This Debt Agreement Number can then be quoted to debt collectors should they contact you.

“ITSA is the regulator of the personal insolvency system in Australia and is part of the Australian Government Attorney-General’s Department.”

* Current amounts to 20 December 2011