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The Bankruptcy Amendment (Debt Agreement Reform) Act 2018 received Royal Assent on Thursday 27 September 2018. The majority of the amendments commenced on 27 June 2019. These reforms include:
- New restrictions on the length of debt agreements. The reforms prevent a debtor from proposing a debt agreement that would last longer than three years from the day the agreement is made. However, debtors who own or have equity in their principal place of residence can propose a debt agreement length of up to five years. The median length of debt agreement proposals accepted by creditors in the June quarter 2019 was five years. This was consistent through 2018–19. The median length fell to three years in the June quarter 2020.
- Doubling of the assets threshold. There are conditions for eligibility to enter a debt agreement, including having assets below a set (threshold) amount. The reforms broaden the scope of debtors who are eligible to lodge a debt agreement proposal by doubling the assets threshold amount.
These reforms are a break in series for our statistical publications.
Further information on the Debt Agreement law reform is available on our website.
The debt agreement reforms are a break in series for our statistical publications. From the September quarter 2019, our statistics include debt agreements by month. We will continue to publish these monthly figures for the coming year.
Creditors vote on whether to accept a debt agreement proposal. The voting period for a debt agreement proposal is generally five weeks. Creditors accepted 86% of debt agreement proposals accepted by the Official Receiver in the June quarter 2020. This is a fall from 89% in the June quarter 2019.
New debt agreements fell 25.0% in the June quarter 2020 compared to the June quarter 2019. There were falls in all states and territories.
We will publish monthly debt agreement statistics commencing July 2017. We will continue to publish these monthly figures for the coming year. If you would like monthly statistics prior to this, please contact statistics [at] afsa.gov.au.