What Is A Part 9 Debt Agreement
Creditors will be contacted in writing by AFSA and asked to vote in favour of or reject your debt contract proposal. You will also be asked to indicate the outstanding amount of your account, whether the account is secured or unsecured, whether your account is shared or has a guarantor, or whether you have other debts with that creditor. There are admission requirements that must be met for the proposal for a debt agreement to be accepted. After submitting your proposal to AFSA, the official recipient will evaluate the proposal and verify whether it meets these requirements. If the proposal is deemed not to meet these requirements or is not in the best interests of creditors, it may be rejected by AFSA. The first relevant date is the processing date, which is the date on which the afsa accepts your debt contract for processing and sends it to creditors for a vote. 35 days from that date, or 42 if the proposed debt agreement is processed in December, is the last date of the vote. This date is called the deadline. A debt agreement is a formal alternative to bankruptcy, where all your creditors agree to accept a partial payment of the debt in equal shares.
This is done under Part IX of the Bankruptcy Act. You don`t have to be able to pay your debts for this type of deal. Before signing a debt contract, it`s important to seek advice from a financial advisor to make sure your situation isn`t worse. Many debt agreement administrators aggressively promote their services and charge very high fees for services that you may not need and that may work to your detriment. For example, if you only receive Centrelink income, it`s protected from your creditors, and if you don`t have a rich fortune, a debt agreement will likely put you in a worse position due to the high fees. So be sure to get advice from an independent financial advisor who can help you choose the best option for your situation, make sure your interests are served, and even negotiate with your creditors. Let`s say you have unsecured debt totaling $35,000 and you can afford to offer your creditors $125 a week for 260 weeks, or $32,500. If the creditors accept your proposals, they will also appoint us for the administration of your debt contract, agreeing that we may withhold part of your repayment for the administration of the agreement. The amount we withhold will be deducted from the $32,500 and is not an additional amount or fee you paid.
It is important that you have a complete and complete understanding of the consequences of the debt agreement and all other options available to deal with your debt. Debt administrators present Part IX debt agreements as an «alternative» to bankruptcy. In fact, it is a type of bankruptcy and are listed in your credit report and in the National Personal Insolvency Index (NPI) for five years from the date of conclusion of the agreement or performance of obligations, whichever is later. Fox Symes calculates an administration fee for managing your debt contract for the duration of your contract. By law, these fees must be expressed both in dollars and as a percentage of the payments you must make once the debt agreement proposal has been accepted. .