I'm having trouble paying my debt agreement

If you are unable to keep up with the terms of your debt agreement[?] you could consider:

  • Varying (changing) your agreement.
  • Terminating (cancelling) your agreement.

For both of these options, your debt agreement administrator[?] needs to submit a proposal to your creditors[?].

Also be aware that if you don’t comply with the terms of your agreement, e.g. you don't make the agreed payments:

  • We or your creditors may vary or terminate the agreement if you don’t make payments for 6 months.
  • This can result in creditors being able to take action to recover your debts.

Vary your debt agreement

If you want to continue with the agreement, talk to your administrator about a variation proposal. You can use this option if your circumstances have changed, and you can't make your agreed payments. For example:

  • you lose your job
  • your household expenses have increased
  • you have an additional dependant to support.

If you would like to do this, talk to your administrator to help you with this process. They need to submit forms with us for your creditors to vote on. Creditors vote on a variation proposal in the same way they vote on the original proposal to set up the debt agreement.

Debt agreements lodged from 27 June 2019

If your original debt agreement was lodged on or after 27 June 2019, your variation proposal must meet certain requirements such as:

  • Your proposed payments must meet a payment to income ratio to make sure you can comfortably make your payments. If you own or have equity in your home you may be exempt from this. For more information see Indexed Amounts.
  • The total length of your agreement must not be longer than three years (unless you own your home or if you have a substantial and unforeseen change in circumstances).

If your creditors don't accept you proposal, the terms of the original debt agreement remain.

A creditor (including your administrator in some circumstances) may also submit a variation proposal.

For more information see: Official Receiver Practice Statement 11 - Debt agreements

Terminate your debt agreement

If your circumstances change and you want to end the agreement, talk to your debt agreement administrator about a termination proposal.

They need to submit forms with us for your creditors to vote on and if:

  • The majority in value vote yes, the agreement will terminate and you will be liable[?] to pay the debts.
  • They don’t accept your proposal, the terms of the current agreement continue.

We, or your creditors can also apply to terminate your debt agreement.

Note: If you are going to apply for bankruptcy you must first terminate your debt agreement.

Automatic termination

Your agreement automatically terminates if you:

  • fail to make payments for 6 months after a payment is due or
  • don’t complete your payments within 6 months of the agreement end date.

If this happens, your administrator lodges forms with us to terminate the agreement.

Effects of terminating a debt agreement:

  • Creditors can commence or continue recovery for the payment of debts that you owe (including interest).
  • Creditors can apply to make you bankrupt through court[?].
  • Information about your debt agreement will remain on the National Personal Insolvency Index (NPII)[?] for a limited time.

For more information see: Official Receiver Practice Statement 11 - Debt agreements