Consequences of a debt agreement

Entering into a debt agreement is a serious step and there are consequences that may impact you. You need to comply with the obligations of the agreement and penalties may apply if you don't. Proposing a debt agreement is an 'act of bankruptcy'[?] and your creditors can use this to apply to the court to make you bankrupt.

Understanding how this agreement works and what to expect will help you decide if it's the right move for you.

You will have a debt agreement administrator who will manage your agreement

A debt agreement administrator[?] is the person who manages the agreement. They work with you, and your creditors[?], to achieve a fair and reasonable outcome for all.

During your agreement, you have an obligation to provide information to your administrator, including changes to your circumstances.

When you apply for a debt agreement, you must nominate a debt agreement administrator.

A debt agreement may affect your business

If you trade under a business name that isn’t your own, you must tell people you do business with that you're in a debt agreement. 

A debt agreement does not release you from all debts

A debt agreement will release you from most unsecured debt when you complete all your obligations and payments.

Secured creditors however may seize and sell any assets (e.g. house) which you have offered as security for credit if you are behind in your payments.

A debt agreement doesn’t release another person from a debt jointly owned with you.

You must list all of your debts in your debt agreement proposal. 

For more information see: What debts does a debt agreement cover?

Your name will appear on the National Personal Insolvency Index (NPII) for a limited time

The amount of time your debt agreement appears on the NPII?] will vary depending on your circumstances, and how your agreement ends.

For requests to hide details on the NPII see Can I hide my details that appear on the NPII?

Completed debt agreements

  • 5 years from the date the debt agreement was made or
  • the date the obligations are complete, whichever is later.

Terminated debt agreements

  • 5 years from the date the debt agreement starts or
  • 2 years from the date of termination, whichever is later.

Debt agreements declared void

  • 5 years from the date the debt agreement starts or
  • 2 years from the date of the court order, whichever is later.

Withdrawn, rejected, cancelled or lapsed debt agreement proposals

Will appear on the NPII for 1 year from the day that:

  • you withdraw the proposal or
  • the credit provider refused the proposal or
  • the acceptance of your proposal was cancelled or
  • the proposal lapsed.

Entering a debt agreement can affect your ability to obtain future credit

Your details may appear on a credit reporting agency’s[?] records for up to 5 years, or longer in some cases. For more information about credit reporting is available at ASIC's MoneySmart.