Part 9 Debt Agreements vs Personal Insolvency (Part 10) Agreement

What's the actual difference between a Part 9 and Part 10?

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.

What are Part 9 and Part 10 Agreements?

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.

The differences between Part 9 Debt Agreements and Personal Insolvency Agreements

Part 9 Debt AgreementPart 10 Debt Agreement (Personal Insolvency)
EligibilityYou can lodge a proposal if:

  • You're unable to pay your debts when they are due
  • You haven't been bankrupt, had a debt agreement or personal insolvency agreement in the last 10 years
  • Your unsecured debts and assets are less than $111,675.20
  • You estimate your after-tax will be less than $83,756.40 for the next 12 months
You can lodge a proposal if you:

  • Are unable to pay your dents when they are due
  • Are present in Australia or have a residential or business connection to Australia
  • Have nor proposed a PIA in the previous six months
How long it lastsBetween three and five years.Differs between agreements, but usually when the trustee makes the final payment to your creditors.
Your credit fileDetails 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 businessYou 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 assetsSecured 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.

How to decide between a Part 9 Debt Agreement and Personal Insolvency Agreement

Here is what to consider when trying to make your decision:

  • Do you meet the eligibility criteria? Check the eligibility criteria for both Paty 9 and Part 10 Agreements. The criteria for a Part 9 Debt Agreement is more restrictive, so ensure you are eligible.
  • Your assets. One of the key differences between Part 9 Debt Agreements and Personal Insolvency Agreements is how assets are treated. Consider what will happen both to your property and to the assets you've put up as security when considering your options.
  • Lasting effects of the agreements. Personal insolvency agreements may be shorter or longer depending on the individual agreement and the level of debt you are in, so it's difficult to make comparisons here. However, both result in you having a listing on your credit file for up to five years and your name being listed on the NPII – a searchable register of bankrupt people. The difference is that your name will appear for a limited time with a Part 9 Agreement but it will appear there forever with a Part 10.

Final verdict: Part 9 Debt Agreement vs Part 10 Debt Agreement

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.

Need to talk to someone about your debt?

Rates last updated February 20th, 2018
Fox Symes Debt Solutions
Struggling with multiple debts? Speak to a Fox Symes debt consolidation expert to help you reduce what you’re paying.
Enquire now More

Picture: Shutterstock

Was this content helpful to you? No  Yes

Related Posts

Personal Loan Offers

Important Information*
Harmoney Unsecured Personal Loan

Interest rates are tailored to each applicant individually, and start from as low as 6.99% p.a. to 26.95% p.a. based on your credit history.

SocietyOne Unsecured Personal Loan

Based on your risk profile, you will receive a tailored rate between 7.5% and 20.14% with a SocietyOne personal loan. Apply before 31 March 2018 to earn 2 Velocity Points for every $1 you borrow.

Pepper Money Unsecured Fixed Rate Personal Loan

Apply for up to $50,000 and receive conditional approval within minutes. Interest rates range from 9.99% p.a. to 21.49% p.a. The rate you are approved for depends on individual circumstances.

NAB Personal Loan Unsecured Fixed

An unsecured personal loan with a competitive fixed rate that you can make additional repayments to without penalty. Note: You must have held a NAB credit card or transaction account for at least 6 months before applying.

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question