Debt Agreement Process

Once a debtor is deemed eligible, a proposal is submitted to the Insolvency Trustee Service of Australia (ITSA) who then determines if the proposal is acceptable, and in the interests of the creditors. Creditors then vote, the result of which leads to acceptance or rejection of the proposal. If 75% or greater approval is met, the proposal becomes a debt agreement.

Your Administrator, who must be a federally Registered Debt Agreement Administrator  receives your contributions and distributes monies to creditors at predetermined intervals; and in accordance with the Debt Agreement.

Debt Solutions

Secured Creditors and Recurring Creditors

When formulating your debt agreement your counsellor will take into account payments that are required for the maintenance of contractual obligations such as auto and mortgage payments.

A debt agreement does not permit for the inclusion of arrears of payments on secured debt however a proposal may be made in this regard in extreme circumstances.

Recurring debt such as utility expenses or rent will be allowed for in your budget. Debt in respect of previous supply - that is where you have vacated a previous property and still owe in respect of such supply or even rent-will be included in your proposal.

 
Who can enter into a Part IX Debt Agreement

A debt agreement can be proposed by a debtor who has - 

• Not been bankrupt, utilised a debt agreement or given an authority under Section 188 of the Bankruptcy Act - in the last 10 years
• After tax income of less than about $61,875.45 - adjustable to CPI
• Unsecured debts of less than about $82,500.60 - adjustable to CPI 
• Property not exempt under bankruptcy.

What is a Debt Agreement ?

A debt agreement is a simple means of making an arrangement with all of your unsecured creditors.
Debt agreements represent a low cost flexible alternative to bankruptcy.

How do I consolidate my debts ?

With your co-operation, we will formulate a written proposal that is first processed through the office of the Insolvency Trustee Service of Australia (ITSA), a federal government agency. You can propose to pay your creditors by installment, make a lump sum payment at some future time or even give assets (to be converted to cash)in part or full payment.

What exactly is Bankruptcy ?

Bankruptcy offers the ultimate protection from creditors however it is an action to be taken only in the direst circumstance. You can seek voluntary bankruptcy or you may be forced into bankruptcy on a Creditor’s Petition. In either event, the Court will sequestrate your estate and your financial affairs will be both vested in a Trustee and subject to investigation. You can be prosecuted under the Criminal Code in respect of some matters. Bankruptcy not relieve you of paying back your creditors – that is a matter for the Trustee to decide based on your earning capacity and other adopted thresh-holds.

•  In most circumstances you must declare your bankrupt state when conducting business;         
• You must give regular reports to your Trustee:
•  If you conduct business in a licenced occupation you will lose your licence immediately;
• It may be difficult for you to open a bank account;
• You will certainly find it difficult to obtain any further credit;
• You cannot travel overseas without the permission of your Trustee;
• You will remain an undischargd bankrupt for a minimum period of 3 years.
• Transactions that have taken place prior to sequestration will be investigated and dishonest debtors prosecuted or the transaction may be over-turned by the Trustee.

What is an Unsecured Debt ?

An unsecured debt is a debt that is not subject to the repossession of goods in the event of non payment.  The remedy of the creditor is to sue in a civil court jurisdiction, obtain judgment and proceed with an available remedy.

What is a Secured Debt ?

A secured debt is a debt that is subject to any form of lien or mortgage. It will apply to goods in your possession that can be repossessed if you fail to pay the contractual obligation

Garnishee Order. What is that ?

A Court Judgment must first exist. The creditor will apply to the Court to have a fixed amount of money deducted from your wage or salary. A garnishee can also be obtained against bank accounts and debtors’ ledgers or any other situation where you may have cash assets. A garnishee can be obtained ex-parte, that means without your knowledge or consent but must be based on a Court Judgment.

What is the ITSA ?

Insolvency and Trustee Service of Australia is a Executive Federal Government Agency with six Australian jurisdictions controlled by an Official Receiver.

Their purpose is to provide a personal insolvency system that produces equitable outcomes for debtors and creditors, enjoys public confidence and minimises the impact of financial failure on the community.

Definition of Solvent.

A person is solvent if and only if  he or she can pay his or her debts from their own monies as and when they fall due.

Definition of Insolvent.

A person is insolvent if they are not solvent.

Definition of Creditor
A person or organisation which extends credit to others.
A person or entity (such as a bank) to whom a debt is owed