Debt Agreement Personal Insolvency Agreements Video

Hi I’m Steven Kugel. Welcome to the Insolvency Experts.

In this episode I am going to briefly explain to you the concept of a debt agreement and a Personal Insolvency Agreement

A debt agreement is a formal arrangement under Part IX of the Bankruptcy Act and in effect is designed for debtors who want to avoid full blown bankruptcy.

There are certain qualifying features of a Debt Agreement which at the end of 2010 are as follows;

A debtor or the person in trouble needs to have less than;

• $90,326.60 Unsecured debts; and
• $90,326.6 assets; and
• $90,735.45 income before tax

To qualify to enter into such an agreement.

Typically, people entering into these agreements have consumer debt — credit card debts and personal loans and average income.

In a debt agreement, the person will enter into a legally binding repayment plan with their creditors in order to repay their debts at a level that is affordable.

• A debt agreement usually runs over a 3-5 years its benefits are that
• Full blown bankruptcy is avoided
• Regular payments are set at an appropriate level to the persons budget
• Unpaid debt will be legally written off (including interest)
• All creditors are bound to the agreement
• Freedom to travel overseas without restriction
• Usually interest and penalties stop upon signing the agreement

A debt agreement is ideal for persons who have a poor credit record, who want to avoid bankruptcy and who cannot obtain a consolidation loan.

It should however be noted that a Debt Agreement is an act of bankruptcy under the Bankruptcy Act and as such, do not enter into such an arrangement without seeking the appropriate advice.

A Personal Insolvency Agreement under Part X of the Bankruptcy Act is essentially the big brother of a Part IX Debt agreement but is for persons with more than;

• $90,326.60 Unsecured debts; and
• $90,326.6 assets; and
• $90,735.45 income before tax

However the same theory applies — that is, you wish to avoid bankruptcy and to encourage creditors to allow that to occur, you will make an offer to your creditors that would be better than what they would receive from your estate if you were to declare bankruptcy.