
Get exclusive money-saving offers and guides
Straight to your inbox
Updated
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
Named for different sections in the bankruptcy act and also known as Personal Insolvency Agreements , Part 9 Debt Agreements and Part 10 Debt Agreements are ways of dealing with unmanageable debt. They are a step before declaring full bankruptcy but still come with some consequences of which you should be aware.
To help decide which course of action is right for you, this guide will take you through the differences between these two agreements, their consequences and how they help you deal with your debt.
Part 9 Debt Agreement, commonly referred to as debt agreement, is a legally binding agreement between you and your creditors arranged by a third-party. Debt agreements involve you paying a percentage of your combined debt to your creditors through this third party, known as your debt administrator. Debt agreements usually last for between three to five years.
Part 10 Debt Agreement, usually referred to as a personal insolvency agreement (PIA), is a legally binding agreement between you and your creditors, administered by a trustee. The trustee takes control of your property and makes an offer to your creditors. This offer may be to pay all or part of your debt by instalments or a lump sum. The length of this agreement type differs depending on the individual arrangement, but it usually ends once the final payment is made.
Part 9 Debt Agreement | Part 10 Debt Agreement (Personal Insolvency) | |
---|---|---|
Eligibility | You can lodge a proposal if:
| You can lodge a proposal if you:
|
How long it lasts | Between three and five years. | Differs between agreements, but usually when the trustee makes the final payment to your creditors. |
Your credit file | Details of your debt agreement will be listed on your credit file for up to five years. | Details of your personal insolvency will be listed on your credit file for up to five years. |
Your business | You must disclose your debt agreement to all people you do business with if your business isn't in your name. | You may be able to run your business if the terms of the agreement allow this. |
Your assets | Secured creditors may seize and sell any assets you've offered as security for credit if you're behind in repayments. | You will not be able to deal with your property, such as your house or car, without the consent of your controlling trustee |
National Personal Insolvency Index (NPII) | Your details will be listed for a limited period of time. | Your details will be listed on the NPII permanently. |
Here is what to consider when trying to make your decision:
The two main differences between Part 9 Debt Agreements and Personal Insolvency Agreements are how your assets are trusted and what happens once the agreement ends. In a Part 9 Agreement, the only assets that are at risk are the ones you put up as security for loans, and they are only at risk if you fail to make repayments.
In a Personal Insolvency Agreement, your trustee takes control of your property and makes an offer to the trustees who are not able to deal with your property without the consent of your managing trustee.
Once the agreement ends, your name will appear forever on the NPII if you opt for a Personal Insolvency Agreement. Your name will also be listed on this index if you opt for a Part 9 but it will only be for a limited period of time.
These are important facts to consider. Remember that both Part 9 and Part 10 Agreements are acts of bankruptcy and the decision should not be taken lightly. These agreements can help you get out of debt, but you need to exercise proper due diligence.
Picture: Shutterstock
Learn about coronavirus financial support options, complimentary insurance and other credit card details you may be wondering about.
SPONSORED: Find out the 5 best ways to consolidate your debt and become debt free in 2020.
How does Nokia's flagship Nokia 9 Pureview stack up against the premium Samsung Galaxy S10?
How does Samsung's new flagship Galaxy S10 compare to its previous hero phone, the Galaxy S9?
Get started with week 4 of the finder financial bootcamp.
We take a deep dive into the small differences and similarities between Airbnb and Vrbo to help you decide which company is ideal for your next getaway.
Take advantage of the range of debt solutions Debt Busters offers and get out of the financial hole you’re in faster.
If you're struggling with debt, these are the differences between Part 9 Debt Agreements and bankruptcy so you can make the right choice for you.
Want to understand the differences between personal insolvency and bankruptcy, and what both of these terms mean for your financial future? Find out here.
Bankruptcy doesn't clear all of your debts – here is a guide to which debts aren't eligible to be covered by bankruptcy.