Informal Agreement: What You Need to Know

An Informal Agreement is an agreement between you and your creditors to change the terms on your existing debt contracts. It is a way to get out of debt without the consequences of a Part IX (9) Debt Agreement or Bankruptcy. It allows you to renegotiate the terms of your debt. You can then settle on a new repayment arrangement – one which is affordable to you.

The Pros and Cons of an Informal Agreement

An Informal Agreement can be a powerful tool against unmanageable debt, stopping creditor harassment immediately and consolidating your debt into a single, manageable payment. This highly personalised solution addresses your financial challenges with minimal disruption, allowing you to secure new repayment plans that align with your financial capabilities. Ideal for those who want to protect their credit file or do not qualify for a Part IX (9) Debt Agreement, it offers a holistic approach to debt relief.

The Pros

• Alternative to Bankruptcy: Provides a viable option to avoid bankruptcy and its associated limitations.
• Credit File Protection: Acting early can prevent significant impact on your credit file.
• Simplified Payments: For ongoing arrangements, make one easy regular payment, with Revive Financial handling all collections and payments on your behalf.
• Interest Reduction: In most cases, interest is paused or substantially reduced on your debt.
• Debt Reduction: In most cases, it allows you to reduce the total amount you need to repay to your creditors.
• Selective Debt Inclusion: Not all debts need to be included, giving you flexibility in managing your financial obligations.
• Credit Relief: Calls and harassment from creditors cease once they recognise we are working with you to find a solution.
• Creditor Cooperation: An administrator of your debts increases the likelihood of creditors continuing negotiations and reaching a final settlement.

The Cons

• Credit File Impact: Informal Agreements are negotiated under Financial Hardship, which may reflect on your credit file for 1 year from the month the arrangement ends if the credit provider participates in Comprehensive Credit Reporting. Financial Hardship information is visible but does not impact your credit score. However, failure to meet minimum repayments during the preparation and negotiation of the agreement can impact your credit file. Additionally, failing to meet agreed repayments during the administration phase can impact our ability to pay your creditors, resulting in missed repayments being reported on your credit file.
• Compliance Requirement: If you don’t meet the terms of your Informal Agreement or make your payments in full and on time, creditors can recommence collection proceedings, take legal action or pursue bankruptcy.
• Non-Participating Creditors: Not all creditors may agree to a negotiated arrangement and therefore may not be included in the Informal Agreement.

The Difference Between a Part IX (9) Debt Agreement and an Informal Agreement

An Informal Agreement is similar to a Part IX (9) Debt Agreement. It allows you to reduce your debt, pause your interest and make your repayments in peace. However, there are some key differences which make an Informal Agreement the preferred option for those who are eligible.

Impact on Your Credit File

Unlike a Debt Agreement, an Informal Agreement is negotiated privately with your creditors and isn’t legislated by the Bankruptcy Act. This means it won’t be noted on your credit file in the same way. However, if the agreement is negotiated under financial hardship provisions, it may still be visible on your credit file for up to one year from the month the arrangement ends. Importantly, while this financial hardship information is visible on your credit file, it does not impact your credit score.

If your debts are in arrears prior to entering an Informal Agreement, you may already have a default on your credit file. However, entering an Informal Agreement will help you manage your debts and avoid any further defaults.

Not Written Into the Bankruptcy Act

An Informal Agreement is not an act of Bankruptcy, so your name won’t be listed on the National Personal Insolvency Index, nor will it impact your employment. Some professional bodies and trade associations have restrictions and conditions which apply to those who enter into Bankruptcy or a Part IX (9) Debt Agreement.

It Doesn’t Have Limiting Criteria

The Australian Government legislates Part IX (9) Debt Agreements so there are requirements you must adhere to before you apply. Those limits do not apply for an Informal Agreement. If you have a higher income, equity in property or excessive debt, an Informal Agreement may be the solution for you.

Is an Informal Agreement Right for you?

Because an Informal Agreement operates separately to the Bankruptcy Act, there are a few things you need to be wary of. All of your creditors must be on board and agree to your proposal for your Informal Agreement. It’s imperative you have experienced, professional debt negotiators, like the team at Revive Financial.

You shouldn’t break the terms of your Informal Agreement by consistently missing repayments without explanation. Your creditors can reinstate your original debts and start recovery proceedings. Remember, an Informal Agreement is legally binding. Your creditors cannot pursue you for any additional funds, but you must stick to the agreed repayments.

Am I Eligible for an Informal Agreement?

To enter an Informal Agreement, you must be able to prove severe financial hardship. If you have simply fallen behind in your debt repayments or have taken on too much credit, your creditors will not accept the proposal and we will need to find you an alternative debt solution. Some examples of eligibility include severe financial hardship caused by:

• Sudden and unexpected illness or injury
• An unexpected and permanent change in employment
• An unexpected change in living arrangements, such as separation or divorce

You may also be eligible for an Informal Agreement if you fall outside the criteria for a Part IX (9) Debt Agreement or your employment or industry association restricts you from entering into a Part IX (9) Debt Agreement.

How to Enter an Informal Agreement

If you think an Informal Agreement is the best course of action for you, contact Revive Financial today. We will liaise with your creditors to reach a mutually beneficial arrangement. Give us a call today on 1800 534 534.

For more information on Informal Agreements, check out or Informal Agreement page here.