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Part IX Debt Agreement Pros & Cons

What is a Part IX Debt Agreement?

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

Personal Debt in Australia

Introduced in Australia in 1996, Part IX Debt Agreements were developed as an alternative to declaring bankruptcy. Each debt agreement has its pros and cons, but it essentially allows people to negotiate their repayments to pay what they can afford.

In a Part IX Debt Agreement, creditors are repaid a fraction of each dollar owed. Debtors are also able to honour their debts without struggling through financial hardship.

If it’s 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 personal Part IX Debt Agreement in Australia, you must:

  • Not have been bankrupt or had a debt agreement in the past 10 years
  • Have less than $115,733.80* in unsecured debts, and less than $115,733.80* in divisible property value
  • Be expecting your after-tax income for the next 12 months to be less than $86,800.35*.

*Figures are current as at 20/03/2019
(These figures are set by AFSA and updated twice a year)

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 $6,000 in Centrelink benefits as a stay-at-home parent.

They had 2 credit cards (totalling $16,000) and a personal loan (owing $8,000). The minimum repayments for these debts were $250 a week. The couple was also trying to pay off a $13,000 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. This was something their creditors began hassling them about – to make up their missed repayments.

Stressed and struggling, Nathan 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.

A Part 9 Debt Agreement helped Nathan and Kristen

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

Our experts can talk you through your situation and provide detailed advice.
Get in touch for a free consultation today.

How to Enter a Part IX Debt Agreement

Step 1: Talk to a Revive Financial Specialist

If you’re struggling with personal debt in Australia, 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 determine the right option for you.

Step 2: Enter Negotiations

If an agreement like the Part IX 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 – while still living comfortably
  • Negotiate with your creditors to get the best repayment amount in place.

Once accepted, your new repayment schedule will begin and your creditors will cease all their collection actions on those debts.

Step 3: Repay your debt

Once everything has been negotiated and scheduled, the last part of the process is the actual repayments you make. You’ll start making repayments to Revive Financial and we’ll repay your creditors according to the agreement. At the end of the agreement, your debts will be settled and you can start financially fresh.

Part IX Debt Agreements and Your Credit File

When the Part IX Debt Agreement was introduced, it created an option for people to honour their debts and avoid bankruptcy – without struggling through financial hardship.

A debt agreement doesn’t look good or bad on your credit file, but it will be noted on your credit file for 5 years. This could make it difficult to obtain more credit and enter into plans like mobile phone plans. Even if you repay your agreement after 3 or 4 years, the default will remain.

While it allows people to avoid many of the harsh restrictions and regulations of bankruptcy, a Part IX Debt Agreement has its own list of pros and cons.

Benefits of a Part IX Debt Agreement

Most important when considering a Part IX Debt Agreement and its pros and cons is that it allows you to avoid the regulations and restrictions associated with bankruptcy. If you own property and are worried about losing your home, a Part IX Debt Agreement may be a better alternative for you.

Part IX Debt Agreements will only apply to unsecured debts, such as:

  • Credit cards
  • Personal loans
  • Tax debts.

As long as you keep up the minimum repayments on your unsecured debts, they won’t be impacted by your personal debt agreement. In fact, a Part IX 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 IX Debt Agreement is legislated under Part IX of the Bankruptcy Act . Any company that provides assistance with Debt Agreements must be a Registered Debt Agreement Administrator and are regulated by the Australian Financial Securities Authority (AFSA).

No. Once a debt agreement has been entered into, all interest and fees are paused for the duration of the agreement, and your regular repayments are replaced by your debt agreement repayments.

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

All unsecured debts can be included in a Part IX Debt Agreement. This includes:

  • Credit cards and store cards
  • Personal loans
  • ATO Debts.

It can’t include SPUR debts, fines or any secured debts like your mortgage or car loan.

Relevant Articles

To learn more about debt agreements and whether a Part IX Debt Agreement is right for you, take a look at our articles on personal debt agreements.

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