Debt Agreement Australia Review: A Comprehensive Guide

Debt has become an inevitable part of our lives, and at times, it can be overwhelming. Increasing credit card bills, pending loans, and bills can add up to a mountain of debt that seems impossible to overcome. However, there are several ways to deal with debt, and one of the most popular options in Australia is a debt agreement. In this article, we will review the debt agreement process in Australia, its benefits, and drawbacks.

What is a Debt Agreement?

A debt agreement is a legally binding agreement between a debtor and their creditors. The agreement outlines a new payment plan that allows the debtor to repay their debts over a specified period. Debt agreements can be an excellent option for those who do not qualify for other debt solutions, like bankruptcy.

Who Can Enter a Debt Agreement?

Not everyone can enter a debt agreement. To be eligible, you must meet specific requirements laid out by the Australian government. These include:

– You must be insolvent, meaning you cannot pay your debts as they become due.

– You must have unsecured debts totalled between $10,000 and $250,000.

– You must have a regular income or assets that can be sold to repay the debt.

If you meet these criteria, you can consider a debt agreement as an option for dealing with your debt.

How Does It Work?

The debt agreement process involves several steps, including:

1. Consultation: You need to seek advice from a qualified debt advisor who can help you understand your options.

2. Proposal: You and your advisor will prepare a proposal outlining your repayment plan and submit it to the creditors for approval.

3. Acceptance: Creditors have 15 days to consider your proposal. If more than 50% of creditors agree to your proposal, it is accepted and becomes binding on all creditors.

4. Repayment: Once the proposal is accepted, you will make regular payments according to the repayment plan.

5. Completion: When you complete the repayment plan, the debt agreement ends, and you are released from your debts.

Benefits of Debt Agreement

A debt agreement can offer several benefits, including:

1. Manageability: A debt agreement can help you manage your finances and pay off your debts at an affordable rate.

2. Legal Protection: Once your debt agreement is accepted, your creditors cannot take any legal action against you.

3. Credit Rating: A debt agreement is registered on your credit report, but it is not as severe as a bankruptcy record.

Drawbacks of Debt Agreement

While a debt agreement can be a viable option, it also has its drawbacks, such as:

1. Repayment: You must make regular payments as outlined in the agreement. Failure to do so can result in legal action and termination of the agreement.

2. Eligibility: Not everyone is eligible for a debt agreement, and those who do must meet specific criteria.

3. Credit Rating: While a debt agreement is not as severe as a bankruptcy record, it can still negatively impact your credit rating.


Dealing with debt can be stressful, but a debt agreement can offer an affordable and manageable solution. It is essential to consult a qualified debt advisor and understand the eligibility criteria, benefits, and drawbacks of a debt agreement before entering into one. With the right advice and a well-prepared proposal, you can make a fresh start and overcome your debt.