What is a debt agreement?
A debt agreement is a binding arrangement between you and your creditors to pay a sum of money owed to your creditors that you can afford. It’s also referred to as a Part IX agreement as it can be found in Part 9 of the Bankruptcy Act 1996. They're offered to Australians with low incomes who can't repay everything they owe but want to avoid bankruptcy.
I tried to apply for a debt consolidation loan but was rejected over the phone, however they offered an “alternative” that would be just as easy as a loan. At no point was I told that Part IX is considered an act of bankruptcy or that I couldn’t access credit. In fact, I was told getting a mortgage would be difficult but not impossible (but it was impossible).
Anyway, I am on track to pay it out over 3 years instead of 5. If you finalise the debt early is there any chance in having it removed from your credit file early, particularly if I was not accurately informed about the process? I have no other negative impacts on my credit report.
Hi Jessica,
Thank you for getting in touch with Finder.
Sorry to hear about your struggle with your loan application.
According to the Australian Financial Security Authority (AFSA), your debt agreement or personal insolvency agreement appears in 2 places:
Your agreement appears on your credit report for 5 years from the start date of your agreement. This can sometimes be longer and may affect your ability to obtain credit. For more information regarding your credit report, contact a credit reporting agency.
I hope this helps.
Please feel free to reach out to us if you have any other inquiries.
Thank you and have a wonderful day!
Cheers,
Jeni
I have just entered a debt agreement. Can I still pay up my own company?
Hi Mick,
Thank you for getting in touch with finder.
As you are aware, under a Part IX debt agreement, your creditors agree to accept an amount of money that you can afford to pay, over a set period of time, to settle your debts. Yes, you can still pay up for your own company but I suggest that you seek expert advice on this matter like your debt agreement administrator.
I hope this helps.
Have a great day!
Cheers,
Jeni
Hi I want to know who I can speak to about reducing my debt so I can get in front with everything
Hi Melissa,
Thanks for your comment.
Since you’re considering on reducing your debt, debt consolidation might be one of your options. Consolidate your debt to get back in control of your finances & pay back your debts.
You also might find these pages helpful:
– Bad Credit Debt Consolidation
– Personal loans for debt consolidation
Hope this helps.
Regards,
Jhezelyn
After a part IX agreement is complete and all obligations are met can a potential lender see my past history? Is it difficult to establish a credit rating again?
Hi Kevin,
Thanks for your inquiry!
When a Part IX debt agreement has been cleared it may take a period of time to rebuild the credit score. Depending on the individual’s financial circumstances and repayment consistency, it is possible to rebuild to a positive credit score. The debt agreement will appear on your report for five years from the date you enter into it.
I hope this helps.
Cheers,
Jonathan
Hi I have got out of my Part 9 debt agreement in September last year but when I tried to get a personal loan I was told no who is best to go through for a personal loan so I can rebuild my credit rating since my debt agreement is the only thing bad on my credit report have checked it all out as I have no other defaults on my credit report I also paid my debt agreement out 12 months before I had to thanks
Hi Donna,
Thanks for your inquiry.
Please refer to our guide on the credit repair process. This can be carried through individually or through an experienced credit repair agency.
Cheers,
Jonathan