Your rights as a creditor in a debt agreement

If you are a creditor[?] in a debt agreement, there is some important information you should be aware of. Your rights to pursue payment for a debt may change. You may also be eligible to receive payments as set out in the agreement.

What is a debt agreement?

It is a binding agreement between you and the person who owes you money (the debtor). Both parties agree on a sum of money. These agreements can be a flexible way for people to settle their debts.

A debt agreement administrator[?] manages the agreement. Practising registered debt agreement administrators.

Receiving a debt agreement proposal as a creditor

If you've received a debt agreement proposal, someone who owes you money is making a formal offer to renegotiate payments. They base their offer on what they can afford.

A debt agreement administrator[?] manages the proposal. You need to vote on the agreement to ensure you’re eligible to receive payments.

For creditors[?] to accept the proposal, a majority of the dollar value of creditors need to vote yes.

The proposal you receive should include:

  • the proposal
  • an explanatory statement
  • information about voting on the proposal.

During the voting period, most unsecured creditors are not able to try to recover the debt.

To find out more about the proposal, contact the debt agreement administrator.

In some cases you may receive a proposal to terminate an existing agreement. Normally the person who owes you money is no longer able to satisfy the agreement.

How long do I have to vote?

For your vote to count, complete the claim and vote form (CAV) online before the voting period ends. For more information about lodging your vote online, see: Debt Agreements online.

The voting period is 35 days (except in December when it is 42 days).

For proposals to terminate an existing agreement, the voting period is 14 days (except in December when it is 21 days).

Your vote will not be counted if we receive it after the deadline date.

If creditors accept the agreement

  • You must comply with the terms of the agreement.
  • The debt agreement administrator manages repayments of the debts.

For more information see:  Can I pursue payment during a debt agreement?

If creditors don't accept the agreement

  • Normally creditors can begin or continue recovery action.  
  • If the debt is over $5,000 you may apply to the court[?] to make the individual bankrupt.

Can I pursue payment during a debt agreement?

If you’re an unsecured creditor you must comply with the terms of the agreement. This means you can no longer pursue the debt or add interest once the agreement begins. There are some exceptions. 

Unsecured debts and debt agreements

Being an unsecured creditor means your debt isn't tied to a particular asset. If you're an unsecured creditor, you must comply with the terms of the agreement. This applies to you even if you voted 'no' to the agreement proposal.

In most cases, this means you can no longer pursue the person for the debt.

There are exceptions when you can pursue a debt during a debt agreement. Some of these include:

  • Debts incurred after the agreement started.
  • Unliquidated debts - debts where the person has not accepted liability and amount is unknown.
  • Joint debts - you are able to pursue your debt from the person who is not in the agreement.
  • If we terminate the agreement - due to the person not meeting their obligations.

For more information see: Creditor's quick guide - debt agreements and unsecured debts.

Secured debts and debt agreements

Being a secured creditor means your debt is tied to a particular asset e.g. car or home loan.

A debt agreement does not change your rights as a secured creditor.

  • You are still able to pursue the person for payment of the debt.
  • You may repossess and sell the secured goods if the person is unable to maintain repayments

Receiving payments in a debt agreement

The debt agreement administrator is responsible for providing payments to creditors. Contact the debt agreement administrator for information about payments.

If the person in the debt agreement doesn’t make a payment for six months, we may terminate the agreement. Once we terminate the debt agreement, you may continue to recover your debt.

Confirm someone is in a debt agreement

If you want to confirm someone is in a debt agreement, contact the administrator. If you don’t know who that is, ask the person who owes you money for their administrator details.

If you are unable to obtain the administrator details, you may wish to complete a Bankruptcy Register Search.

Vary a debt agreement

If you are a creditor in a debt agreement, it may be possible to change (or vary) the agreement. A debt agreement administrator can propose to vary the agreement if they are an affected creditor. The person who is in the debt agreement may also propose to vary the agreement.

This usually happens if the person can no longer afford to make the agreed payments. This may be due to a change in their circumstances, such as if the person:

  • loses their job
  • household expenses increase
  • has an additional dependant to support.

To vary an agreement you need to submit a variation proposal with us. This should include:

  • an explanation of the changes in the person's circumstances
  • any communication you've had with the person regarding their changes or payments
  • summary of payments in debt agreement (including if they are in arrears)

Once you've submitted the proposal, we assess it. If we accept the proposal, we send it to all eligible creditors to vote on.

For information on the voting process see: Official Receiver Practice Statement 13 - Voting on debt agreement, variation and termination proposals

For more information about varying a debt agreement see: Official Receiver Practice Statement 15 - Proposal to vary a debt agreement and withdrawal of a proposal by the Official Receiver

Next steps

Complete and submit a proposal to vary a debt agreement online. For more information see: Debt Agreements online.

Terminate a debt agreement

If you are a creditor in a debt agreement, it may be possible for you to cancel (or terminate) the agreement. Normally this happens because the person in the agreement is no longer able to make payments. For example if the person:

  • failed to start or continue making payments and there it's not likely they will complete the agreement
  • had a change in circumstances and a variation to reduce payments is not feasible
  • did not disclose their accurate income or employment
  • added a significant forgotten debt, resulting in creditors receiving less payments

To terminate an agreement you must submit a termination proposal with us. This should include:

  • an explanation of the changes in the person's circumstances, if applicable
  • supporting statement
  • status report from the debt agreement administrator showing:
    • payment history
    • arrears and
    • the likelihood of them continuing payments
      We cannot accept the proposal if the payment are to date.

Once you've submitted the proposal, we assess it. If we accept the proposal, we send it to all eligible creditors to vote on.

For information on the voting process see: Official Receiver Practice Statement 13 - Voting on debt agreement, variation and termination proposals

For more information about varying a debt agreement see: Official Receiver Practice Statement 16 - Proposal to terminate a debt agreement and withdrawal of a proposal

Next steps

Complete and submit a proposal to terminate a debt agreement online. For more information see: Debt Agreements online