Thinking about a Debt Agreement?

A Debt Agreement, also known as a Part 9 Debt Agreement, is a formal, legally binding insolvency option under Part IX of the Bankruptcy Act 1966. It has eligibility requirements and ongoing obligations. Once accepted, affected creditors are bound by the outcome.

A Debt Arrangement is an informal repayment plan negotiated with one or more creditors outside formal insolvency. It may offer more flexibility if your circumstances change, although any terms you agree to may still be binding between you and that creditor.

Put simply, an informal debt arrangement is negotiated creditor by creditor, while a formal Debt Agreement follows a regulated legal process.

An informal debt arrangement is not a formal insolvency agreement and is not recorded on the NPII as a Part 9 Debt Agreement. However, when you and a creditor agree to changed terms, those terms may still be binding between you and that creditor. Other creditors are not automatically included. Before agreeing to anything, speak to a MyBudget Money Coach to get clear on your options, the potential impacts and any questions you still have.

No. Each creditor considers an informal debt arrangement separately, which means one creditor may agree while another may not. The arrangement only applies to creditors who accept it. A formal Part 9 Debt Agreement works differently: if more than 50% by value of eligible votes cast vote yes, affected creditors are bound. An expert Money Coach can help you understand what each pathway could mean for you.

The debts that may be included depend on the pathway and what each creditor agrees to.

Informal debt arrangement

You may be able to negotiate repayments for:

• Credit cards, personal loans and Buy Now Pay Later accounts
• Overdue utilities, phone, internet and household bills
• Rent, rates, tax debts, fines and other arrears
• Home or car loans, although the lender keeps its rights over the secured asset

Formal Debt Agreement (Part 9)

It generally covers eligible unsecured debts, including:

• Credit and store cards
• Unsecured personal and payday loans
• Overdrawn accounts and unpaid rent
• Utility, phone and internet bills
• Medical, legal, accounting and ATO debts

A Part 9 Debt Agreement does not change a secured lender’s rights over a home or car. Some debts, including HECS/HELP, child support, court fines and debts incurred after the proposal, may remain payable.

An expert MyBudget Money Coach can help you map your debts and understand your options before a registered Debt Agreement Administrator like MyDebt Solution MyBudget’s sister company) confirms what may be included.

Speaking to MyBudget or reviewing your options does not by itself affect your credit score. An informal arrangement is not recorded as a Part 9 insolvency agreement, but its credit-file impact depends on the creditor, account status and reporting. Credit facilities may close, loan terms may extend and total interest may increase. MyBudget cannot remove accurate credit information, but can help you manage repayments and understand the likely consequences.

If you’re looking for debt agreement help, an expert Money Coach will take the time to understand your debts, income, expenses, assets and goals. We can create a realistic 12-month Debt Management Plan and help you compare an informal debt arrangement, a formal Part 9 Debt Agreement and other debt management strategies. You’re under no obligation to choose a Debt Agreement, and ongoing support is available if you decide to join MyBudget.