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Part IX Debt Agreement Pros & Cons

What is a Part 9 Debt Agreement?

A Debt Agreement is a formal arrangement between you and your creditor to make paying your debt more manageable. Part 9 Debt Agreements are lodged with the Australian Financial Security Authority (AFSA) and administered under the Bankruptcy Act.

Part 9 Debt Agreements were introduced in 1996 as an alternative to declaring bankruptcy. A Part 9 Debt Agreement allows people to negotiate their debt repayments to pay what they can afford. In a Part 9 Debt Agreement, creditors are repaid a fraction of each dollar owed and debtors are able to honour their debts without struggling through financial hardship.

If it is accepted, your debt agreement is legally binding and your creditor can no longer take action against you or your property. You won’t be released from your unsecured debts until you complete your obligations under the agreement.

To be considered for a debt agreement, you must:

  • Not have been bankrupt or had a debt agreement in the past ten years
  • Have less than $111,675.20 in unsecured debts, and less than $111,675.20 in divisible property value
  • Expect your after-tax income for the next 12 months to be less than $83,756.40

(These figures are set by the Australian Financial Security Authority, and updated twice a year.)

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Success Story: Repay your debts without the struggle

Nathan and Kristen began to struggle financially after Nathan sustained an injury and couldn’t work for a number of months. Nathan earned $46,000 each year while Kristen received $6000 in Centrelink Benefits as a stay at home parent.

They had 2 credit cards, totalling $16000 and a personal loan owing $8000. The minimum repayments for these debts were $250 a week and they were also trying to pay off a $13000 car loan and juggle everyday living expenses like groceries, petrol and rent.

Nathan was able to return to work, but his time away had seen them fall behind on their repayments and their creditors were hassling them to make up their missed repayments.

Stressed and struggling, N and Kristen turned to Revive Financial for help. Because Nathan was back at work, he had the capacity to repay his debts, just not at the rate the banks were expecting.

Revive Financial was able to negotiate with Nathans creditors and offered them $120 per week, as opposed to the $250 they were currently paying. His creditors accepted this proposal and the Part 9 Debt Agreement was put in place over 4 years.

A Part 9 Debt Agreement helped Nathan and Kristen

Nathan was relieved to be able to repay his debts at a more affordable rate and his creditors were pleased to recover some money and help their client avoid Bankruptcy.

How to Enter a Part 9 Debt Agreement

Step 1: Talk To A ReVIVE Financial Specialist

Step 1: Talk to a ReVIVE Financial Specialist

If you’re struggling with debt, bankruptcy isn’t your only option. You may be able to reduce your debt or make payments more manageable through debt consolidation, informal negotiations, or formal debt agreements.

Speaking to a Revive Financial specialist in a free consultation will help you understand your financial position and the right option for you.

Step 2: Enter Negotiations

Step 2: Enter Negotiations

If a Debt Agreement is the right solution for you, your Revive Financial specialist will help you figure out how much you can contribute towards your debts and still live comfortably. We will then negotiate with your creditors to get this repayment amount in place.

Once accepted, your new repayment schedule will begin and your creditors will cease all collection action on the debts.

Step 3: Repay Your Debt

Step 3: Repay your debt

You will start making repayments to Revive Financial who will repay your creditors according to the agreement. At the end of the Agreement, your debts will be settled and you can start afresh.

Part 9 Debt Agreements and your credit file

A Part 9 debt Agreement was introduced into the Bankruptcy Act in 1996. It created an option for people to honour their debts and avoid bankruptcy without struggling through financial hardship.

While it allows people to avoid many of the harsh restrictions and regulations of Bankruptcy, it has its own list of pros and cons.

A Part 9 Debt Agreement will be noted on your credit file for 5 years. This could make it difficult to obtain more credit, including entering into mobile phone plans. Even if you repay your agreement after 3 or 4 years, the default will remain.

Benefits of a Part 9 Debt Agreement

A Part 9 Debt Agreement allows you to avoid the regulations and restrictions associated with bankruptcy. If you own property and you are worried about losing your home, a Part 9 Debt Agreement may be a better alternative for you.

A Part 9 Debt Agreement will only apply to unsecured debts, such as credit cards, personal loans and even tax debts. As long as you keep up the minimum repayments on your unsecured debts, they won’t be impacted by the Debt Agreement.

In fact, a Debt Agreement will free up more of your cash flow, making it easier to afford your secured payments on the house and car.


Yes. A Part 9 Debt Agreement is named so because it is Part 9 of the Bankruptcy Act – a federal legislation. Part 9 Debt Agreements are legislated by the Australian Financial Securities Authority (AFSA), an arm of the Australian Government. Any company providing assistance with Debt Agreements must be a Registered Debt Agreement Administrator and comply with the regulations set by AFSA.

No. Once a Debt Agreement has been entered into, all interest and fees are frozen and your regular repayments are replaced by your Debt Agreement repayments.

No. A Part 9 Debt Agreement is a new repayment arrangement with your existing creditors. It is not a loan or a new line of credit. It is a legally binding repayment arrangement between you and your creditors.

All unsecured debts can be included in a Part 9 Debt Agreement. This includes credit cards, personal loans, store cards and ATO Debts. It can’t include SPUR Debts, fines or any secured debts such as your mortgage or car loan.

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