Considering a Part 9 debt agreement? Explore all your options first

If you have started searching for a Part 9 debt agreement (also known as a Part IX debt agreement), chances are things feel pretty overwhelming right now.

Maybe you are juggling multiple debts, struggling to keep up with repayments, or feeling the pressure of creditor calls and overdue bills. When financial stress starts affecting your sleep, relationships, or peace of mind, it is natural to look for a solution that offers relief.

A Part 9 debt agreement is one option available to Australians experiencing serious financial hardship. For some people, it can provide a structured pathway forward. But because it is a formal insolvency arrangement governed by Australian law, it is important to understand exactly what it involves before making a commitment.

Before you consider a Part 9 debt agreement, it is worth remembering that while it can be an effective solution for some Australians, it is not your only option. Depending on your circumstances, you may also be able to explore:

• Hardship arrangements
• Informal repayment plans
• Debt consolidation
• Refinancing
• Budgeting support
• Financial counselling.

The right solution depends on your income, assets, debts, and long-term goals.

Before you make any big decisions, downloading our free guide, 10 Steps to Get Out of Debt, can give you a practical, step-by-step framework to help you map out a way forward.

Falling behind on bills or debt repayments is a financial challenge to solve, not a verdict on your character.

There is a notion right now that says if you are falling behind on your credit cards, personal loans, or Buy Now, Pay Later (BNPL)

accounts, you have somehow failed. The reality is very different.

When you cannot keep up with your credit cards or loan repayments, your brain does not just see a late fee or overdue notice. It often triggers a sense of shame. That emotional response can make it harder to think clearly, ask for help, or objectively assess your options. That stigma causes many people to hide their financial stress, avoid asking for help, and sometimes rush toward solutions simply to make the pressure stop.

Let us challenge that idea right now: debt stress is a financial problem, not a personal failure. Falling behind does not mean you lack discipline, intelligence, or responsibility. More often, it means you are trying to navigate rising living costs, unexpected setbacks, changing circumstances, or a period where the numbers simply are not working in your favour.

If you are already falling behind, our guide on what to do when you can’t pay your bills outlines practical steps you can take immediately before the situation worsens.

When you step back and look at your situation through a clear, forward-planning lens, the shame starts to fade and practical solutions become easier to see. Seeking help is a positive step. The goal is not just to deal with today’s debt, it is to create a sustainable path forward that supports your long-term financial wellbeing.

A Part 9 debt agreement (sometimes written as a Part IX debt agreement) is a legally binding, formal insolvency agreement under the Bankruptcy Act 1966 between you and your creditors to repay an agreed, affordable portion of your unsecured debts. It serves as an alternative to bankruptcy, freezing interest and fees while you pay off what you owe over a set timeframe.

The Part 9 debt agreement Australia framework is designed specifically for people who cannot reasonably repay their debts in full but want to avoid the more severe restrictions of bankruptcy.

Common debts included in a debt agreement may include:

• Credit cards
• Personal loans
• Store cards
• Buy Now, Pay Later (BNPL) debts
• Unsecured lines of credit
• Certain unpaid utility bills.

Because it is a formal insolvency arrangement, a debt agreement carries significant legal and financial consequences that should be carefully considered before proceeding.

The lifestyle impacts of a Part 9 debt agreement

While a formal agreement can freeze interest and stop creditor contact, it represents a significant legal step. Some of the main credit and lifestyle impacts include:

• A drop in your credit score: A formal insolvency record is placed on your credit report for up to five years, which severely lowers your credit score and makes it very difficult to obtain personal loans, credit cards, or competitive interest rates
• The NPII register: Your name, date of birth, and address are permanently recorded on the National Personal Insolvency Index (NPII), which is a public register
• Rental challenges: Some real estate agents and landlords perform NPII searches, which may affect your rental applications

Employment restrictions: Certain professional associations, licensing bodies, or industries (such as financial services, real estate, or law enforcement) may restrict individuals with insolvency records.

To be eligible for a Part 9 debt agreement in Australia, you must be insolvent, have not been bankrupt or in a debt agreement in the last 10 years, and fall below specific thresholds for unsecured debt, assets, and after-tax income set by the Australian Financial Security Authority (AFSA).

You may be eligible for a Part 9 debt agreement if you meet the following official statutory limits (updated by AFSA as of March 2026):

• Unsecured debt limit: Your total unsecured debts must be less than $150,950.80
• Divisible property limit: Your total divisible assets (excluding protected property like basic household items and tools of trade) must be worth less than $301,901.60
• After-tax income limit: Your expected after-tax income

  (which you can estimate using our free Income Tax Calculator) for the next 12 months must be less than $113,213.10.

Eligibility is only one part of the decision-making process. Factors such as your household expenses, your mortgage commitments, and your future plans should also be considered when assessing whether a debt agreement is appropriate.

Entering into a formal Part 9 debt agreement requires disclosing your complete financial situation, demonstrating that you can afford the proposed repayments after covering basic living costs, and submitting a formal proposal through a registered administrator. For the agreement to become legally binding, a majority in dollar value of the creditors who vote must accept your proposal. Once accepted, you must maintain the payments for the entire agreed duration.

A Part 9 debt agreement can help protect your home by keeping unsecured creditors from taking legal action against your property, provided you maintain your mortgage repayments and your creditors agree to your proposal.

For many homeowners experiencing financial stress, protecting their property is the highest priority when exploring debt solutions.

Unlike bankruptcy, where a trustee may be required to sell your home to repay your debts, a Part 9 debt agreement allows you to retain your assets. You propose a repayment plan to your unsecured creditors based on what you can afford, while you continue to pay your secured mortgage directly to your bank.

However, because a Part 9 debt agreement is a formal insolvency arrangement, it can make refinancing or securing a new home loan incredibly difficult. It is highly recommended to seek professional, independent advice to carefully weigh these long-term property impacts before making a decision.

Navigating your debt options requires assessing your level of financial pressure and choosing the least restrictive pathway that can successfully resolve your debts without unnecessarily damaging your credit score.

Think of this roadmap as a simple guide to finding the right level of financial support for your circumstances:

Step 1: Direct lender hardship (DIY negotiation): If your money is tight due to a temporary setback, your first step should be contacting your banks directly. Most lenders have dedicated hardship teams that can pause payments, freeze interest, or adjust your loan terms for a short period. This is a free, informal option

Step 2: Free financial counselling (National Debt Helpline): If you are experiencing severe financial hardship and have very low or irregular income, speaking with a community-based financial counsellor is an excellent path. Financial counsellors provide free, independent, and confidential advice to help you understand your legal rights and negotiate with creditors. You can reach the National Debt Helpline on 1800 007 007

Step 3: Structured, managed budgeting (MyBudget): If you earn a steady income but feel completely overwhelmed by juggling bills, credit cards, and everyday expenses, a managed budgeting service can help. We design a realistic 12-month roadmap, negotiate with your creditors, and automate your bill payments for you. This allows you to pay off your debts within your means, build a savings buffer, and completely preserve your credit score from insolvency markers

Step 4: Formal Part 9 debt agreement: If your unsecured debts are unmanageable and you want to protect assets like your home, a Part 9 debt agreement might be your best option. While we don’t administer these agreements directly, MyBudget can help you review your whole situation first to check for any informal alternatives. If a Part 9 is the right path, we can seamlessly introduce you to our sister brand, MyDebtSolutions (a registered Debt Agreement Administrator), to help you get it set up

Step 5: Bankruptcy: This is the final formal legal insolvency option. It can release you from most unsecured debts, but it has the most severe consequences, including the potential sale of assets like your home, restrictions on international travel, and strict income earning thresholds. If bankruptcy is your only realistic option, you don’t have to navigate it alone. MyBudget is here to support you through the transition: helping you gather your documents, coordinate the paperwork, and build a clean post-bankruptcy budget so you can protect your livelihood and start rebuilding your life from day one.

The cost of a Part 9 debt agreement includes setup fees, ongoing administration fees, and government levies. These costs are regulated and detailed under the official AFSA fees and charges directory, and are typically built directly into your single regular repayment so they are paid out of your agreed contribution rather than as extra upfront bills.

Before entering into an agreement, your administrator must provide a clear fee disclosure, which generally includes:

• Setup and lodgement fees: A statutory lodgement fee (currently $200) is payable to AFSA when your proposal is submitted, though some administrators may also charge their own professional setup fee to arrange and compile the proposal documents
• Ongoing administration fees: A fee charged by your registered administrator to manage your agreement over its duration. This fee must be clearly disclosed in your debt agreement proposal and approved by your creditors before the agreement begins
• Government levies: A statutory levy known as the realisations charge (currently set at 7% of all funds received in the administration of your agreement) is automatically paid to AFSA to cover the costs of running and regulating the personal insolvency system.

It is vital to understand the total amount you will repay, how much of your money actually goes toward clearing your debts, and how much is kept by the administrator before you sign.

A Part 9 debt agreement can help with credit card debt by freezing interest charges and combining your outstanding credit card balances, personal loans, and other unsecured debts into a single, affordable repayment plan.

Credit cards often carry high interest rates, making it challenging to reduce the principal balance when you are only making minimum repayments. A debt agreement can stop the interest cycle, allowing your payments to directly reduce what you owe.

However, a debt agreement is not the same as standard debt consolidation. A debt consolidation option combines your debts into a new, regular bank loan, whereas a Part 9 debt agreement is an act of insolvency under the Bankruptcy Act with lasting legal consequences.

A Part 9 debt agreement is a negotiated plan to pay back an affordable portion of your debts over time, whereas bankruptcy is a legal process that can release you from most unsecured debts but may involve asset sales and strict income thresholds.

Understanding the difference is crucial for protecting your assets and making an informed choice:

The primary alternatives to a Part 9 debt agreement include negotiating informal hardship arrangements directly with your lenders, using a structured budgeting service like MyBudget, applying for a standard debt consolidation loan, or seeking free support through a community financial counsellor.

Before committing to a legally binding insolvency agreement, it is worth looking at other pathways that do not carry the same long-term credit report consequences:

• Informal hardship programs: Most banks and lenders have dedicated hardship teams that can freeze interest, pause payments, or restructure your loan terms temporarily. This is an informal, flexible option that doesn’t go on a public register
• Informal debt management (MyBudget): Working with a budgeting service to manage your bills and debts within a structured budget. We negotiate directly with your creditors on your behalf without entering a formal legal insolvency process or adding a default marker to your credit report
• Standard debt consolidation (MyBudget Loans): If your credit score is still intact, you may be able to secure a new personal loan to combine multiple high-interest credit cards or loans into one lower-interest payment. Note that this is a regular bank loan and not a legal act of insolvency
• Financial counselling: Free, independent support through community organisations or the National Debt Helpline (NDH) on 1800 007 007. They can provide unbiased guidance on your legal rights if you are experiencing severe financial distress.

MyBudget helps you choose the right debt solution by assessing your complete financial situation, mapping out a clear 12-month roadmap, and showing you whether an informal budget strategy can resolve your debts before you commit to formal insolvency.

A clear diagnostic check on your money

Think of MyBudget as a supportive first step. Before you commit to a formal insolvency agreement or bankruptcy, our Money Coaches look at your real, day-to-day cash flow, mapping out every bill, repayment, and cost-of-living expense over a full year.

This personalized 12-month plan shows you exactly what is possible, helping you determine whether an informal, flexible budget system can get you back on track or if a formal option is more appropriate. If a formal debt agreement is your best path, we can seamlessly connect you with our sister company, MyDebtSolutions, to guide you through the process safely.

Note: MyBudget is a budgeting and money management service. While we do not administer formal legal debt agreements directly, we work closely with our sister brand, MyDebtSolutions, who are registered Debt Agreement Administrators and can guide you through the process.

Technology that builds certainty

One of the biggest challenges people face when dealing with debt is uncertainty. Not knowing which bills to pay first, how long it will take to get back on track, or whether a debt agreement is even necessary can make financial stress feel overwhelming.

That is why MyBudget uses proprietary debt solution technology designed to create visibility, certainty, and control. Combined with the support of a dedicated Money Coach, our technology provides a clear roadmap showing where your money is going, when bills will be paid, and what your path toward improved financial wellbeing looks like over time.

Before signing a debt agreement, you should obtain a complete, independent assessment of your finances, understand the five-year credit score impact on your credit report, and explore informal budgeting alternatives that might help you avoid formal insolvency.

A Part 9 debt agreement can be an effective solution for some people experiencing significant financial stress, but other debt solutions may provide a better outcome without the long-term impact on your credit score.

At MyBudget, we have helped more than 130,000 Australians gain clarity about their financial situation and understand the solutions available to them.

Budgeting and debt relief work best when they address the root cause of your cash-flow pressure. Before committing to a legally binding, five-year insolvency arrangement that impacts your credit score, it is vital to test whether a structured budget and professional negotiation can resolve your debts informally.

Struggling with debt stress can feel isolating, but you don’t have to figure it out alone. Book a free, confidential chat with a MyBudget Money Coach today. We will help you look at your options, map out a clear 12-month budget, and build a realistic plan to get your money sorted, completely pressure-free and with zero judgment.

Book a free consultation or call us on 1300 300 922.