Part Nine Debt Agreement Help

Understanding a Part 9 Debt Agreement is very important, and may be something that you need to know about and use during your life. The most important principle when it comes to debt is knowing there are two types of debt agreements. One is a formal arrangement, known as a Part 9 Debt Agreement and the other is an informal agreement that you arrange yourself with the creditor.Should you ever be in the position where you cannot pay your debts, but want to avoid becoming bankrupt, you can submit a Part 9 Debt Agreement proposal for your creditors to consider. The Part 9 Debt Agreement proposal will provide details on how you will pay your outstanding debts.Definition and history of a Part 9 Debt Agreement: A Part 9 Debt Agreement is a legally binding agreement between yourself (the debtor) and your creditors. Part 9 Debt Agreements were added to the bankruptcy act in 1996 in an effort to assist lower income earners avoid bankruptcy and negotiate an affordable contract to repay their debts.Why use a Part 9 Debt Agreement?A Part 9 Debt Agreement is a formal compromise between you (the debtor) and your creditors. The purpose of this legally binding agreement is to make it a win/win solution for both parties, as opposed to bankruptcy, where both parties are disadvantaged. The offer of the Part 9 Debt Agreement is made by the debtor, via a debt administrator.  From here, your creditors then vote on whether to accept or reject your offer, with the majority winning the vote.When can a Part 9 Debt Agreement be used?A Part 9 Debt Agreement can only be used if certain circumstances apply to you (the debtor). The first circumstance is that you are insolvent (unable to pay your debts when they fall due). You must also never have been previously declared bankrupt, utilized a debt agreement or given an authority under section 188 of the Bankruptcy Act in the last 10 years. The next condition that you must meet is that you have an after tax income of less than the threshold (currently $61,875.45). Another condition that should apply to you is that you have unsecured debts of less than the threshold (currently $82,560.60), you should have property that would be divisible among creditors if you (the debtor) were bankrupt; valued at less than the threshold (currently $82,560.60).Should these conditions be met,  then you have more chance of your creditors accepting the offer. Remember that there is never any guarantee that the offer will be accepted, however it is usually the preferred option of most creditors.What happens if your creditors accept it?If your creditors accept your Part nine Debt Agreement proposal and you enter a Debt Agreement, you will avoid becoming a bankrupt, which is certainly good for your credit rating. However, you should note the fact that your Debt Agreement will appear on your credit report for seven years. Creditors will also view it as an act of bankruptcy, so it will work against you for future credit proposals. In most cases, you will have to pay an upfront fee to a Debt Agreement administrator to enter a Debt Agreement. You will also need to pay a monthly administration fee throughout the period of the Debt Agreement.There are also other things to consider before going ahead with a Part 9 Debt Agreement. Your name will be listed on a National Personal Insolvency Index (NPII) forever. This is a record held by ITSA and they will charge a search fee to look up this information. This is different to your credit history records.