Part 9 Debt Agreements vs Personal Insolvency (Part 10) Agreement
What's the actual difference between a Part 9 and Part 10?
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.
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 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.|
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?
Fox Symes Debt SolutionsFox Symes offers a range of debt consolidation options to help you if you're struggling with multiple debts.
More guides on Finder
Coronavirus: How to manage your credit card
Learn about coronavirus financial support options, complimentary insurance and other credit card details you may be wondering about.
5 ways to consolidate your debt and break the cycle
SPONSORED: Find out the 5 best ways to consolidate your debt and become debt free in 2020.
Nokia 9 Pureview vs Samsung Galaxy S10
How does Nokia's flagship Nokia 9 Pureview stack up against the premium Samsung Galaxy S10?
Samsung Galaxy S10 vs Samsung Galaxy S9
How does Samsung's new flagship Galaxy S10 compare to its previous hero phone, the Galaxy S9?
Week 4 – Cut your costs: Everyday money hacks
Get started with week 4 of the finder financial bootcamp.
Airbnb vs Vrbo
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.
Debt Busters Review
Take advantage of the range of debt solutions Debt Busters offers and get out of the financial hole you’re in faster.
Part 9 Debt Agreements vs bankruptcy
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.
Insolvency vs bankruptcy
Want to understand the differences between personal insolvency and bankruptcy, and what both of these terms mean for your financial future? Find out here.
Does bankruptcy actually clear your debts?
Bankruptcy doesn't clear all of your debts – here is a guide to which debts aren't eligible to be covered by bankruptcy.
Personal Loan OffersImportant Information*
You'll receive a fixed rate between 6.99% p.a. and 25.69% p.a. based on your risk profile.
Apply for a loan up to $50,000 and repay your loan over 3 or 5 years terms.
You'll receive a fixed rate of 10.5% p.a.
Apply for up to $50,000 to use for a variety of purposes without needing to add security. Available to self-employed applicants. Note: These rates are available until 2 February 2021. Credit, eligibility criteria and terms & conditions apply.
You'll receive a fixed rate between 9.99% p.a. and 18.99% p.a. ( 10.88% p.a. to 19.83% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
You'll receive a fixed rate between 6.99% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
Ask an Expert