Credit Smart Solutions

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...

What is a Debt Agreement and Should You Consider One? Struggling with unmanageable debt in Australia? A debt agreement could offer relief — but it’s not a decision to take lightly. Here’s what you need to know before committing to one. What Is a Debt Agreement? A debt agreement is a legally binding deal between you and your creditors to repay a percentage of your debts over time. It’s managed under Part IX of the Bankruptcy Act and is often seen as a “bankruptcy alternative.” How It Works You work with a registered debt agreement administrator A proposal is sent to your creditors If the majority agree, it becomes binding for all creditors You make regular payments (often over 3–5 years) Who Qualifies? To enter a debt agreement in 2025, you must: Be insolvent (unable to pay debts on time) Owe less than $125,000 in unsecured debt Have assets worth less than $250,000 Earn under $100,000 annually (approx. thresholds) Pros Stops debt collectors an...