User:Bjclarke7/Part IX Debt Agreement

Part IX (Part Nine) of Australia's, Bankruptcy Act 1966 as amended prescribes a legislative scheme by which an insolvent debtor and his or her ordinary, unsecured creditors might reach a binding repayment agreement. Successful debt agreements are registered on Australia's National Personal Insolvency Index (NPII), a public record of personal insolvency administrations. In consequence, a bankruptcy notation is also recorded against the debtor's credit history files for a period of seven years.

Who can enter into a Part IX Debt Agreement?
The 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. Credit Counsellors will usually determine who is a suitable applicant for a Part IX Debt Agreement via an analysis of an individual's personal financial situation.

A debt agreement can only be proposed by an insolvent debtor who has not been bankrupt, utilised a debt agreement or commenced a procedure for a Part X (Part Ten) arrangement under the Bankruptcy Act, in the past 10 years and meets strict income, asset and debt level limits; More importantly, the proposed debt agreement must demonstrate that it will repay more to creditors than could be expected from the debtor becoming bankrupt.

NB. An insolvent debtor is a person who cannot pay his or her debts as and when they fall due.

Debt agreements can be easily completed and managed by the debtor. Application forms and instructions are free from Insolvency and Trustee Service of Australia, (www.itsa.gov.au), the government regulator's office. A debtor may appoint a relative or friend to to manage the distribution of payments to creditors. A paid debt agreement administrator can also be appointed to attend to the distribution of payments to creditor's.

What are 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.

ITSA ensures proposals 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. ITSA maintains the National Personal Insolvency Index (NPII) to ensure it reflects the status of the agreement.

The 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.