What Is a Debt Agreement in Australia and Should You Consider One?
What Is a Debt Agreement in Australia and Should You Consider One? If you're drowning in debt, a debt agreement might sound like a lifeline. But is it the right move in 2025? Let’s break it down. What Is a Debt Agreement? A debt agreement is a legally binding arrangement between you and your creditors to repay a percentage of your debt over time — typically 3 to 5 years. Who Can Apply? Over 18 and insolvent (can’t pay debts when due) Unsecured debts under $120,000 (as of 2025) Assets and income under threshold set by AFSA Pros Stop interest and legal action Consolidate into one regular payment Option to avoid full bankruptcy Cons Serious impact on credit score (stays for 5–7 years) Can affect rental or job applications Not suitable for secured debts (e.g., mortgages) Important Notes You must use a registered debt agreement administrator It’s listed on the National Personal Insolvency Index (NPII) Missing payments can lead to t...