Debt Agreement

Living debt free

Debt Agreement

If you are in debt then a Debt Agreement may be a very good solution for you. Not everyone qualifies to do a Debt Agreement and is only one of many solutions depending on your own particular circumstances. We have been facilitating Debt Agreements since 1996 and have an intimate knowledge of what can work for you.


What is a Debt Agreement?

A Debt Agreement or Part IX is an agreement between you and your creditors where your debts are paid through a repayment plan which you can actually afford based on your capacity to pay. It is legally binding on both you and the creditors.

To be eligible to set up a Debt Agreement you must:

  • Be a person who is insolvent which means you can’t pay your debt as and when they are due.
  • Have not been bankrupt, entered into a Debt Agreement or a personal insolvency agreement in the last 10 years.
  • Have unsecured debts, assets and after tax income for the next 12 months all less than a limit set by the Government.

No, a Debt Agreement is an alternative to bankruptcy. The legislation around a Debt Agreement is covered in the Bankruptcy Act and by submitting a proposal you are committing “an act of bankruptcy” but you are not going bankrupt. There is a big difference.

It is important to note that your name will be listed on the National Personal Insolvency Index (NPII) and your credit file will state that you are solving your financial trouble through a Part IX Debt Agreement. It may affect your chances of being approved for credit over the next 5 years or until the debt agreement is completed: whichever is longer. If you are at the stage of considering doing a Debt Agreement then the chances are you have debts listed on your credit rating file. Completion of a Debt Agreement will clean up these listed defaults.

Upon acceptance of your proposal by your creditors all interest is frozen which allows you to pay back your debts over an extended period of time at an amount per week, fortnight or month that you can afford


If you qualify to submit a proposal then we will help you complete paper work which provides relevant information and documents to your creditors via AFSA.

AFSA (Australian Financial Security Authority) is the Government Department that administers the laws surrounding Debt Agreements.

You will need to provide us with information and documents. Basically we will need to prove your income, your debts and ownership of assets you own. We will also need copies of your current pay slips, Bank Statements, Proof of Rent or Mortgage Payments etc.


Once your paperwork has been finalised and signed we will submit it to AFSA. These documents need to be submitted to AFSA within 14 days of you signing and dating them.

Once AFSA has assessed your proposal they will write to your creditors advising you have submitted a Debt Agreement Proposal and provide them with your repayment plan to vote on.

What sort of Debts Can I Include in My Debt Agreement?

Debts that can be included in a Debt Agreement include

  • credit cards
  • unsecured personal loans
  • overdrawn bank accounts
  • short falls on repossessed cars
  • medical bills
  • store cards
  • tax bills
  • school fees
  • power & gas bills
  • and any other unsecured debts, business suppliers or friends & family.

Only provable unsecured debts can be included.

Secured debts, such as car loans and home loans, are not included in your debt agreement and are allowed for in your budget to keep paying separately.

Non-provable debts like fines, unpaid child support and debts incurred after the debt agreement commences or by fraud are not included in your debt agreement. Please visit the AFSA website for a detailed list of provable and includable debts.

When setting up your Debt Agreement we allow enough in your budget to keep making your car and home payments so these stay safe from creditors. You will continue to pay these loans directly to your lenders.

Generally fines and child support are not provable debts. You will have to continue to pay them outside of your agreement however these are allowed for in your budget.

You must include in your Debt Agreement, all of your unsecured debts that are joint with another person.  Your liability for the debt will be paid from your Debt Agreement.

The co-borrower must continue to pay the creditor or they can still be pursued for their liability, to the full amount owed on the joint debt.

The person who has guaranteed the debt will not be released from the debt even though the debt is included in your Debt Agreement. If you stop paying your Debt Agreement the creditor is likely to pursue the person under the guarantee.

AFSA may reject your proposal for processing if there is missing documentation or information or if you are ineligible to submit a proposal (ie. have too much income, too much debt or own too many assets).

AFSA will process your proposal within 1 or 2 days of receiving then your creditors are sent copies and are asked to vote whether to accept or reject your repayment offer within 35 calendar days. Extended time frames apply around Christmas time.

The Processing Date is the date AFSA accepts your proposal and the Deadline Date is the date by which creditors may vote to accept or reject your proposal. It is 35 days from the Processing Date to the Deadline Date and is usually called the Voting Period.

During the voting period Creditors must cease all recovery action including stopping legal action. You may continue to pay your unsecured creditors. You must continue to pay your secured creditors. These include your house mortgage and car lease. If you have any questions ask us.

AFSA writes to all of your creditors and gives them the opportunity to vote to either support or reject your Debt Agreement Proposal.

  • They will vote Yes or No
  • They will stop recovery action against you
  • Stop charging interest and fees & charges
  • Provide the amount you owe them as at the “Processing Date”
  • Advise if your debt is secured or unsecured
  • Confirm if it is your debt alone or is joint or has a guarantor
  • And advise if you have any other debts with that them.

All unsecured creditors have the right to vote. This will include friends or relatives that you can prove have lent you money.

Every creditor has the right to vote Yes or No.  For your proposal to succeed you have to get more creditors voting Yes than No (in dollar value). Some of the reasons why creditors may vote No to your offer include:-

  • If you fail to disclose all of your debts
  • A debt stated as unsecured is actually secured
  • You just fail to disclose the correct amount owed
  • Your offer of repayment is not the best offer you can make given your income and expenses.

Your creditors may have access to information which you may not have disclosed to us so all relevant information must be disclosed at the time of proposing the Debt Agreement.

Your proposal can get through even with some creditors voting No. Your proposal will be legally binding on all creditors as long as the majority in value (over 50% of the dollar amount of those creditors who decide to vote) actually vote Yes.

There are no guarantees that your proposal will be accepted but it is more likely to be accepted if you make a full and complete disclosure of your financial position and put forward your best offer possible whilst committing to making the repayments offered.

Although we cannot guarantee creditor acceptance we have been helping creditors get paid through the Debt Agreement process for over 17 years and we understand what they expect. We will not propose a Debt Agreement that we consider has no chance of being accepted.

You will commence the repayments from the date stated in the Debt Agreement proposal. Unsecured creditors cannot take any recovery or legal action against you or your property whilst the Debt Agreement is in force. Failure to make the agreed payments can result in any creditor terminated whereby they can then chase you directly again for the debts you owe. You will be released from your unsecured debts once you make the last payment under the Debt Agreement.

There may be reasons why creditors reject your proposal (as outlined above) but you do have the right to resubmit an offer. If this happens we will contact you to work out what we do next. It may be that a creditor has missed the voting deadline. Whatever the reason there is usually a way forward.

Enquire Now

  1. Do you have a house or car that needs protection from debt collectors?
  2. Do you have unsecured debts of more than $10,000?
  3. Is your gross income less than $108,000?

We can help you

You can call us now on

1800 085 550

Active Debt Specialists is based in WA, successfully providing debt solutions to individuals and businesses since 1998. We help thousands of Western Australians to resolve their debt, keep their family homes, continue operating small businesses and eliminate financial stress.

Or We can call you

Unfortunately, we are unable to assist you.

For further assistance we recommend you:

  • Speak to your Creditors
  • Call AFSA on 1300 364 795
  • Speak with a Financial Counsellor
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Unfortunately, we are unable to assist you at this time.

Please contact us for assistance once you have secured a regular income.

We look forward to your call.

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Unfortunately, we are unable to assist you.

You need to have over $7,000 in unsecured debt to apply.
For further assistance we recommend you:

  • Speak to your Creditors
  • Call AFSA on 1300 364 795
  • Speak with a Financial Counsellor
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  1. Credit cards, store cards and personal loans are types of unsecured debts. Mortgages and car loans are not.