What is a Debt Agreement and Should You Consider One?
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...