Debt Agreement

A Debt Agreement is not like a consolidation loan in that it is a formal agreement with your creditors and is usually arranged by a Registered Debt Agreement Administrator.  Usually a debt consolidation loan is arranged through a financial institution like a bank.  However, what a debt agreement does allow you to do is to consolidate or combine unaffordable debt.  Given a debt agreement is a formal agreement with your creditors, strict application criteria does apply (you need to be assessed as being unable to pay your debts, ie insolvent).

Typically the agreements are structured over 3 years or some times up to 5 years. We will help you establish what you can afford to pay to creditors under the agreement. 

A debt agreement may allow you to avoid the stigma of bankruptcy.

Debt Agreements are most suitable for people who have unsecured debts which exceed $8,000 but not more than $$88 379.20 and must be approved the the majority of your creditors ie at least 50% in value  of creditors who vote on your proposal .  In most cases a debt agreement will be over a 3 to 5 year period.

The main benefits of a Debt Agreement can be summarised as:

• You may avoid the stigma of bankruptcy and enjoy the freedom to travel which bankruptcy does not allow;
• Combine unaffordable credit card or store card debt
• Freeze the interest to allow an affordable repayment plan

 If you are seriously considering a debt agreement, please understand that it is a formal agreement under the A Bankruptcy Act and as such:

• It will be recorded on the National Personal Insolvency Index for life
• It will be recorded on your credit file for up to 7 years (which means you may not be able to obtain new credit for up to 7 years)

For more information on a Debt Agreement please refer to Frequently Asked Questions.

Do you qualify for a Debt Agreement? Find out by giving Debt Free a call on 1800 98 10 70.