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 September quarter 2018 was five years. This was consistent throughout 2018–19. The median length fell to three years in the September quarter 2019.
• 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. For the first time, the September quarter 2019 statistics include debt agreements each 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 82% of debt agreement proposals accepted by the Official Receiver in the September quarter 2019. This is a fall from 88% in the September quarter 2018.
New debt agreements since July 2017
New debt agreements fell 33.7% in the September quarter 2019 compared to the September quarter 2018. There were falls in all states and territories.
We have published 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.