There are, however, restrictions on how one can enter into a Debt Agreement. Notably, an individual cannot enter a Debt Agreement if they have previously been bankrupt in the last ten (10) years, the debtor’s unsecured debts, divisible property and after tax income are each greater than the respective threshold amounts prescribed at the time (available from AFSA – Indexed Amounts).
Assuming the above criteria can be satisfied, a Debt Agreement can then be signed and lodged for consideration. If the majority votes in favour of the proposal, it means that a creditor is thereafter restricted from making petitions, pursuing a previous creditor’s petition or taking any action relating to the debts owed. The Debt Agreement is brought to an end either upon the debtor satisfying their obligations or becoming bankruptcy as a result of an inability to follow the terms.
For more information, visit the guidance “What is a debt agreement” provided by the Australian Financial Security Authority.