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what is a debt agreement?

Debt Agreement

If you are in debt then a Debt Agreement may be a solution for you. Fox Symes is the largest provider of Debt Solutions in Australia.

What is a Debt Agreement?

A Debt Agreement or Part 9 Debt Agreement is a legally binding agreement between you and your creditors where creditors agree to accept a sum of money which you can afford and is based on your capacity to pay. You can lodge a Debt Agreement Proposal if you are eligible. To be eligible you must:

  • Be insolvent  
  • Have not been bankrupt, entered into a Debt Agreement or given an authority under Part X of the Bankruptcy Act in the last 10 years
  • Have unsecured debts, assets and after tax income for the next 12 months all less than set limits. 

What does insolvent mean?

A person is insolvent if and only if they cannot pay all their debts as and when they fall due.

Is it the same as going Bankrupt?

No, it is an alternative to bankruptcy. However by submitting a proposal you are committing "an act of bankruptcy".

What does a Debt Agreement do?

It freezes provable unsecured debts upon acceptance of your proposal by creditors. This allows you to pay back the debts over an extended period of time at an amount per week, fortnight or month that you can afford.

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How does it work?


If you are eligible to submit a proposal then Fox Symes will help you with your paper work and provide you with relevant information and documents you need to read and sign. We will need your help because you will have to provide us with information and documents. We will tell you what we need and this will include copies of your current pay slips, Bank Statements, Proof of Rent or Mortgage Payments etc.


Once your paperwork has been finalised, you must read it, sign it and send it back to Fox Symes.  We will then submit it to AFSA (see below). Your paperwork must be submitted to AFSA within 14 days of you signing and dating the proposal and Statement of Affairs. 

Proposal Lodgement

AFSA will process your proposal after they have assessed it, checked your eligibility and determined that all the documentation is complete. AFSA writes to your creditors advising you have submitted a Debt Agreement Proposal and provides them with a copy of your proposal and Explanatory Statement.

What debts can I include in a Debt Agreement?

Only provable unsecured debts can be included.

What is a provable unsecured debt?

Provable unsecured debts include medical bills, store cards, credit cards and some personal loans.

What happens to my secured debts such as my car loan and my house mortgage?

You must continue to pay these loans directly to your creditors.     

What happens to my fines?

Generally fines are not a provable debt. This means you will have to continue to pay them outside of your agreement.

I have a joint debt. What happens with it?

Your unsecured joint debt or debts must be included in your Debt Agreement. However the co-borrower continues to be liable for the whole of the debt.

I have a debt which is guaranteed by someone else. What happens with it?

This debt must be included in your Debt Agreement. However the guarantor will not be released from the debt and when you stop paying the creditor then they are likely to pursue the person under the guarantee. 

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Who is AFSA and what do they do?

Who is AFSA?

AFSA stands for Australian Financial Security Authority. It is the Federal Government agency responsible for the administration and regulation of the personal insolvency system in Australia.

Does AFSA have to accept my proposal?

No.  AFSA may reject your proposal for processing if they think it is not in the best interest of your creditors, or if you are ineligible to submit a proposal or if there are issues with the documentation.

How long does it take?

Once AFSA has accepted your proposal for processing, creditors may vote to either accept or reject your proposal within 35 calendar days, unless your proposal is sent for voting in December when creditors have 42 calendar days to vote. 

What are the important dates?

The Processing Date: This is the date AFSA accepts your proposal for processing; and the Deadline Date: This is the date by which creditors may vote to accept or reject your proposal. It is 35 days from the Processing Date to the Deadline Date.

Between the date AFSA accepts my Debt Agreement for processing and the deadline date, do I pay my unsecured creditors?

You may continue to pay your unsecured creditors. You must continue to pay your secured creditors. These included your house mortgage and car lease. If you have any questions ask us.   

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What do the Creditors have to do?

What do the creditors have to do?

The creditors are written to by AFSA and asked to vote to either support or reject your Debt Agreement Proposal. They are also asked to provide the amount outstanding on your account, advise if the account is secured or unsecured, if your account is joint or has a guarantor on it, or if you have any other debts with that creditor.

Do all my creditors have the right to vote?

All unsecured creditors have the right to vote. A secured creditor can only vote on any unsecured part of their debt.  For example if you have a secured car loan for which you owe $24,500 and your car is valued at $19,000 then the secured creditor has the right to vote on the unsecured portion of this debt. In this example it is $5,500. This is because the value of your car is less than the amount you owe and that portion, or shortfall, is deemed to be an unsecured debt.    

Do all creditors have to agree to my proposal?

No, not all creditors have to agree. The majority in value, i.e., 50.01% of the dollar amount of those creditors who decide to vote, and are entitled to vote, have to agree to your proposal. If you fail to disclose all of your debts, or fail to advise that a debt is a joint debt, has a guarantor, is secured/unsecured, or even just fail to disclose the correct debt level, these are just some reasons that may prompt the creditor to reject your proposal. You need to remember that your creditors may have access to information which you may not have disclosed to us.

What if a creditor does not vote or decides to vote against my proposal?

As long as the majority in value, i.e., 50.01% of the dollar amount of those creditors who decide to vote, and are entitled to vote, accept the proposal then it is legally binding on all creditors.

Can you guarantee that my creditors will accept my proposal?

No. It is your creditors who decide whether to accept or reject your proposal. However as a debtor your responsibility is to make full and complete disclosure of your financial position to your creditors; put forward your best offer and commit to complying with the terms of the proposal.

What happens if my proposal is accepted by my creditors?

While a Debt Agreement is in force, an unsecured creditor cannot take any action against you or your property.  You will be released from your provable unsecured debts once you have completed all payments under the Debt Agreement.

What happens if my creditors reject my proposal?

Should creditors reject your proposal then we may be able to resubmit. This will depend on your creditors and the reasons why they rejected your proposal. Should this happen we will contact you to work out a solution. However if creditors reject your proposal your debts are revived. This means that creditors can pursue you for payment and any interest accrued during the 35-day period is added to your debts.

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What do I have to do?

Provide Information

You need to provide the information we request and make sure it is accurate and current. We also expect you to be truthful and disclose all information relevant to your situation.

Read and Sign Paperwork

To propose a Debt Agreement, you will need to read and sign several documents and return them to Fox Symes. These are legally binding documents, and as such there are penalties under the Bankruptcy Act and Criminal Code for providing false or misleading information. You should carefully and thoroughly read all the information we provide so you are fully informed.

Should I continue to talk with my creditors?

Yes. Your relationship with your creditors is important and by talking with them you can explain your situation and ask them to support your Debt Agreement Proposal. You may also forward their contact details to us and we will talk with them on your behalf.

What should I do if my circumstances change?

You need to inform us if your circumstances change at any stage during the process.  

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What are the consequences of a Debt Agreement?

Act of Bankruptcy

A debtor who proposes a Debt Agreement commits an act of Bankruptcy. This is not the same as going Bankrupt. A Debt Agreement is an alternative to Bankruptcy, but as it comes under Part IX of the Bankruptcy Act, proposing a Debt Agreement is considered an act of Bankruptcy.


Both the Debt Agreement Proposal and the Debt Agreement are registered on the National Personal Insolvency Index (NPII). 

Credit Report

Veda Advantage and Dunn and Bradstreet and other credit-reporting bureaus can use the information on the NPII to advise any creditors that you are party to a Debt Agreement.  A creditor, prior to acceptance can register a default against your name with one of both of the credit report agencies. Your Debt Agreement will remain on your credit file for 5 years from the date it was entered and may affect your ability to get credit during this period.

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What are the benefits of a Debt Agreement?

Greater control over your finances

If your creditors accept your Debt Agreement Proposal then for the term of your agreement you will know exactly how much you have to pay each week or fortnight or month toward it. This will allow you to budget and plan your finances. You also pay no interest on your Debt Agreement once it has been creditor accepted and there are no late or penalties fees.  

An end to your unsecured debt

If you complete your Debt Agreement, that is pay it off, then at the end of the term you will be free from most of your unsecured debt, which is toxic debt. Compare how this works with continuing to make payments on your credit cards. You, like many people, may only manage to pay the minimum monthly repayment on your credit cards. By doing so you will find that it takes years to pay off your debt. Have a look at the moneysmart website ( It shows how $1,000 on your credit card can turn into an 11 year loan because the amount you owe will go down slowly and you'll pay a large amount of interest.

Financial discipline – the foundation for wealth creation

When you are in a Debt Agreement you have no access to credit and therefore you have to learn to live on what you earn.  The reason most people get into debt is because they spend more than they earn. Credit is not your money – it is money you have borrowed and have to pay back. Not spending more than you earn is the foundation of financial discipline which can lead to wealth creation. If you apply financial discipline and complete your Debt Agreement then you can apply the same discipline to creating wealth.

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What will I have to pay?

Set Up Fee

A set-up fee is charged for putting the Debt Agreement Proposal together and the work that is involved in doing so. This fee is $2200. However the maximum you will have to pay upfront is $700. The balance of $1500 will be paid through the Debt Agreement and will receive the same rate of return as all other creditors.

AFSA Lodgement Fee

AFSA charges a Lodgement Fee for every Debt Agreement Proposal. This is a set amount of $200 and is payable every time a Proposal is lodged. This fee is not refundable and must be paid in full, in all circumstances. We will pay this expense on your behalf and recover it together with your Set Up Fee.

Administration Fee

An Administration Fee is charged by Fox Symes for administering your Debt Agreement over the term of your agreement. By law these fees must be expressed both as a dollar amount and as a percentage of the payments to be made by you once the Debt Agreement Proposal is accepted. Let’s look at an example of how this works.

Say for example you have unsecured debts totalling $35,000 and you can afford to offer your creditors $125 a week for 260 weeks which is $32,500. If creditors accept your proposals then they also appoint us to administer your Debt Agreement and in doing so they agree to allow us to retain a portion of what you pay back for the work of administering the agreement. The amount we retain is taken from the $32,500 and it is not an additional amount or fee paid by you.

Realisations Charge

This is a levy charged by AFSA to fund the cost of conducting enquiries, investigating alleged offence, monitoring and regulating trustees and administrators and providing information to a range of clients. This fee is only charged when and if your Debt Agreement Proposal is accepted by your creditors. It is currently charged at 7% of the money received by the administrator of your Debt Agreement, and as with the Administration Fee (see above); this amount is calculated based on the amount of money being paid in your Proposal.

If creditors reject my Debt Agreement Proposal do I get a refund?

No. If Creditors reject your Debt Agreement Proposal your Set Up Fee will not be refunded. If AFSA rejects your proposal for processing because you did not include material information your AFSA Lodgement Fee will not be refunded and nor will your Set Up Fee. Should AFSA reject your proposal for processing because of a Fox Symes error then, in that instance only, your Set Up Fee will be refunded. Please refer to the Appointment and Agreement form. 

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What happens now?

That is entirely up to you. If you wish to proceed with submitting a Debt Agreement Proposal then you will need to work together with your consultant to obtain all of the information needed to proceed. If you are still not sure then you are still able to contact your consultant to discuss this further. If you would like some further information, here are some websites that may be able to help.

View the Debt Agreement Case Study

Fox Symes is the largest provider of debt solutions to individuals and businesses in Australia. Fox Symes helps over 100,000 Australians each year resolve their debt and take financial control.

If you are in debt and want to know more about the solutions available to you contact us on 1300 098 127 or fill out the short contact form.

Enquire Now – Just 4 questions to answer

  1. 1 Do you have a home loan?
  2. 2 Do you have unsecured debts of $7,000 or greater? Credit cards, store cards and personal loans are types of unsecured debts. Mortgages and car loans are not.
  3. 3 Do you receive a regular income?
  4. 4 Have you been bankrupt in the last 13 years?

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Fox Symes is the largest provider of debt solutions to individuals and businesses in Australia. We help over 100,000 Australians each year resolve their debt and take financial control.

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For further assistance we recommend you:

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Please contact us for assistance once you have secured a regular income.

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You need to have over $7,000 in unsecured debt to apply.
For further assistance we recommend you:

  • Speak to your Creditors
  • Call AFSA on 1300 364 795
  • Speak with a Financial Counsellor
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  1. Credit cards, store cards and personal loans are types of unsecured debts. Mortgages and car loans are not.

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  1. Credit cards, store cards and personal loans are types of unsecured debts. Mortgages and car loans are not.