Debt contracts are regulated by the Australian Financial Security Authority, known as AFSA. For more information on debt contracts, bankruptcy contracts and private insolvency contracts, visit the AFSA website at www.afsa.gov.au. This fact sheet (INFO 14) contains general information for directors, assistant directors and secretaries on bankruptcy and private insolvency contracts. It is an agreement between you and your creditors, that is to say to whom you owe money. If you make all refunds under the contract, you will be exempt from the other ingredients of the contract. If you do not reach the end of the agreement, the agreement will be concluded and the creditors will again make all the fault, plus all the interest that has been incurred in the meantime. A "personal insolvency contract" (formerly known as the "Part X agreement") is an alternative to bankruptcy. A person enters into an agreement with his creditors without going bankrupt. Financial advisors can also help you understand the impact of bankruptcy and debt contracts. A debt contract is for people with lower incomes who cannot pay what they owe.
But there are consequences. Before you compete or consider a debt contract, you should explore your other options for managing uncontrollable debt. If you have any questions about whether you are bankrupt or have a private insolvency contract, please contact afSA. If you are unable to meet your debts, you may want to consider bankruptcy or an alternative to bankruptcy called the "debt agreement." These are formal legal options that are available under the Bankruptcy Act 1966. A person or organization called a debt agreement manager would help you propose the agreement and then distribute your repayments to your creditors. A portion of each repayment is retained by the administrator of the debt contract as a management fee for the agreement. A proposal is accepted when a majority of creditors vote in favour of the debtors` proposal. All creditors with supporting debts are bound by the agreement, including those who voted against it.
2- As of June 27, 2019, all debt agreement managers will also have to be in an external dispute settlement system: if you really cannot repay their debts at maturity, you may be able to agree with your creditors to pay a reduced amount, defer certain repayments, reduce the interest rate and/or reduce your repayments.