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Debt Agreement

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

What is a Debt Agreement?

What is a Debt Agreement?

A 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 a Debt Agreement the same as going Bankrupt?

No, a Debt Agreement is an alternative to bankruptcy. However by submitting a Debt Agreement Proposal you are committing "an act of bankruptcy".

What does a Debt Agreement do?

A Debt Agreement freezes provable unsecured debts upon acceptance of your Debt Agreement 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.

How does it work?

Information

If you are eligible to submit a Debt Agreement 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.

Paperwork

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 Debt Agreement 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 in a Debt Agreement.

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 in a Debt Agreement. This means you will have to continue to pay them outside of your Debt 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. 

Who is AFSA and what do they do?

What 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 Debt Agreement Proposal?

No.  AFSA may reject your Debt Agreement 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 Debt Agreement 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 Debt Agreement 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.   

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 Debt Agreement 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 Debt Agreement 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 Debt Agreement 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 Debt Agreement 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 Debt Agreement 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.

Read More - Page 2 on Debt Agreements

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 would like to find out more about a Debt Agreement contact us on 1300 361 204 or fill out the short contact form.

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  1. Do you have a home loan?
  2. Do you have unsecured debts of $8,000 or greater?Credit cards, store cards and personal loans are types of unsecured debts. Mortgages and car loans are not.
  3. Do you receive a regular income?
  4. Have you been bankrupt in the last 13 years?
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Yes! We can help you

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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Unfortunately, we are unable to assist you.

You need to have over $8,000 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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