Part IX Debt Agreements Brisbane Debt Agreement What is it?

So What is a Part IX debt agreement?

A Part IX debt agreement is a legally binding agreement between a debtor and their creditors. A Part IX Debt agreement is a flexible alternative to bankruptcy.

Who can enter into a Part IX Debt Agreement?

The Part IX debt agreement system is only to be used where the debtor is insolvent, i.e. unable to pay their debts as and when they fall due. It would undermine confidence of the system of credit and the debt agreement system if the debtor were solvent.

Information about the current amounts of the limits can be found at on the ITSA Indexed Amounts fact sheet.

More on Part IX Debt Agreements?

An insolvent debtors’ best offer to their creditors is determined based on an analysis of their expected income from all sources, household expenses and circumstances. The debtor must prepare an achievable and sustainable offer to their creditors or their offer may get refused.

All Part IX debt agreement proposals must comply with the wide range of requirements such as eligibility; clarifying aspects of proposals to ensure creditors are well informed to make a decision on their vote; and conducting the voting process with creditors. For more information on this area you can review it on the ITSA website. ITSA maintains the National Personal Insolvency Index (NPII) to ensure it reflects the status of the agreement.

The Part IX debt agreement proposal is sent to creditors to vote upon. It may be accepted or rejected by creditors. A proposal is accepted if a majority of creditors in value vote in favour of the debtor’s proposal.

Some examples of the kinds of proposals offered are:

  • Periodic payments of amounts out of the debtor’s income to creditors, equal to or less than the full amount of all of the debtors provable debts
  • Lump sum payment of less than the full amount of all of the debtor’s provable debts
  • A moratorium on payment of debts
  • Payment from the proceeds of sale of property owned by the debtor

All creditors with provable debts at the time the debtor’s details are entered onto the NPII are bound by the agreement, even those who voted against the proposal. Creditor’s debts are fixed at the date the proposal was entered on the NPII; interest does not accrue; and creditors cannot take or continue action against the debtor to collect their debts.

The debtor is liable for further debt incurred after ITSA accepts the proposal to send to creditors for voting.

If you are on financial hardship and are finding it hard to make ends meet a Part IX debt agreement may be the best solution for your circumstances. To find out how Insolvency Professionals can help and assist with preparing and lodging your a Part IX debt agreement on you behalf call us today on +61 7 3229 4060.

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