Sometimes, when a person or an institution is in a financial mess, he is left no choice but to file for bankruptcy or worse, foreclosure and surrendering assets. Luckily for Australia, there are laws that help safeguard its citizens against bankruptcy and foreclosure: debt agreement. So, how does a debt agreement work? Well, read on to this article to find out more about the part 9 debt agreement definition and other debt related things that might help you in the future.
What is debt agreement?
A debt agreement is made when the debtor is not able to pay off the debt in his terms. It is aided by an attorney and is decided by an Australian judicial court. The part 9 debt agreement definition is, specifically, stated in the bankruptcy act of 1996 as an agreement between the debtor and the creditor to accept whatever amount the debtor can amass. In short it serves as an alternative to bankruptcy.
How does it work?
By the part 9 debt agreement definition, the debtor should present a list of their assets and liabilities so that the court can decide the terms for the payment of the debt. Additionally, a debt agreement administrator usually facilitates the agreement. A lawyer usually submits a proposal to the court where the court makes its decisions from.
Debt agreement proposal
The most important thing to keep in mind before making a debt agreement proposal is to remember that the part ix debt agreement is an agreement. This means that your creditor must approve of your proposal before it can happen. So, you should be ultimately critical of what you can offer but should be realistic at the same time. Remember that you should be able to afford the terms and your proposal should be dynamic so that it can adapt to unexpected circumstances such as inflations and a weak economy.
Who are allowed to propose a debt agreement?
Though the idea of being able to parlay (pirates of the Caribbean parlay) your way out of a debt, not everyone who is in a financial mishap is not allowed to propose a debt agreement. A debtor is only eligible to propose a debt agreement if he meets these parameters:
· When they are unable to pay their debts/credits when they are due or when they are insolvent
· Never filed for a bankruptcy, never had a previous debt agreement in the last ten years
· Owns unsecured debts, and an income that is much less than the amount per annum
· Has paid the debt agreement lodgment fee specified in the law
What happens if it is accepted by the creditor?
If the agreement is accepted by the creditor, this means that the debtor is no longer bankrupt and the deal is now on. The debtors should abide to the agreement. This is because secured debtors waive their rights against confiscation of their possessions that they deemed as collateral to their debt.
Debt is sure a hard predicament to face. Avoid it as much as you can. However, if you are unable to do it, it would be better if you know well about bankruptcy and the likes. So, educate yourself. For more information, visit at http://www.debthelpline.com.au/2012/05/part-9-debt-agreement/