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Debt Centre

Retake Control Of Your Debt

Don’t panic, there are three options available to you – all forms of insolvency – which can wipe the slate clean and allow you to make a fresh start by either applying for Bankruptcy, a Debt Agreement or a Personal Insolvency Agreement.

  • Bankruptcy is an option. Creditors will no longer be able to pursue you, and you could be discharged from your bankruptcy within 3 years, although it will continue to show on your credit report for 7 years. A bankruptcy can be administered by a Registered Trustee or by The Australian Financial Security Authority (AFSA) who will sell any assets you have (including your home) to pay your creditors after paying costs. But you will wipe the slate clean, and free yourself from creditors, except HECS (Higher Education Contribution Scheme) debts, student supplement loans and maintenance payments and child support. Click here for more information
  • A cheap and flexible alternative to formal bankruptcy is a Debt Agreement, aimed at people on low incomes with few assets. It gives consumers who are struggling with their debts the option of reducing the amount they pay to their creditors by agreeing a compromise deal. Payments can take the form of money or property. This type of formal arrangement is primarily used by people with credit card and loan debts they cannot afford to pay, and is subject to a number of restrictions. Debt Agreements can be administered by a Registered Trustee, AFSA or a third party. Registered trustees typically charge a fee of around 20% of the money paid by consumers to creditors. A Debt Agreement is legally binding on all parties. Unlike Bankruptcy your income will not be restricted as long as it does not form part of the agreement. A majority of creditors holding 75% of the debt value must accept the proposal for the Debt Agreement to come into effect. The Agreement normally ends when all parties bound by the agreement have fulfilled their obligations, but it will remain on your credit report for 7 years. Click here for more information.
  • A Personal Insolvency Agreement (PIA) is very similar to a Debt Agreement in many ways. They both offer a flexible alternative to Bankruptcy and its stigma, with creditors agreeing to accept a reduced proportion of money owed to them. Another advantage of a PIA is it doesn’t carry the same eligibility restrictions as a Debt Agreement (see above). On the downside it is a more expensive option as the PIA can only be administered by a registered Trustee or AFSA, who has the power to place a charging order on your property (a sort of mortgage ordered by a court.) A PIA will remain on your credit report for 7 years. For more information click here.

We also strongly recommend you take a look at the advice published jointly by the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission, called ‘Dealing with debt: your rights and responsibilities” This is available in English, Chinese, Vietnamese, Greek, Turkish, Arabic and Italian. Click here to find more.

Too extreme? See alternatives for Moving Forward With Your Debt

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