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.
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.
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.
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.
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.
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.
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.
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:
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.
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.