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DEBT AGREEMENT

OVERVIEW

An alternative to bankruptcy is what’s known as a Debt Agreement. This is essentially a binding agreement between an individual and their creditors, where creditors agree to accept a sum of money that the debtor can afford.

This kind of agreement is often put in place to assist individuals with unmanageable debt, and depending on the arrangement, an individual may make instalments or a lump sum payment for an amount less than the total amount owed to creditors.
At Rapsey Griffiths we’ve worked with many debtors and creditors, advising them in such agreements. There’s an array of details to cover too. For example, an individual’s unsecured debts, assets and after-tax income must be under certain limits to propose a debt agreement.
That’s why it’s vital to have an expert when engaging in such agreements. And, acting early can have a big impact on whether your finances can be ‘turned around’.
Learn more about debt agreements from the ATO.

What to expect from a Debt Agreement

If your creditors accept a debt agreement your creditors can’t recover the rest of the money you owe once you complete the payments. You will:

• pay a percentage of your combined debt over time.
• make repayments to your debt agreement administrator, not to your creditors.