Well done on completing your Part IX (9) Debt Agreement! This is a huge achievement and shows the hard work and commitment you’ve put in over the years. With your debts now repaid, you have a clean slate and a fresh start. This is your chance to move forward and take control of your finances. Here’s what you need to know as you begin this new chapter.
When Are You Discharged from a Debt Agreement?
Having completed a Debt Agreement means you have fulfilled your obligations within the required time-frame. This can be either through making all of the required agreed repayments on time or by paying out your Debt Agreement early. Provided you meet your obligations, your Debt Agreement will be removed from your credit file after 5 years (unless your Debt Agreement is over a longer term). Your name will also be removed from the National Personal Insolvency Index (NPII) after 5 years from the date you entered into the Debt Agreement, provided you complete the agreement (unless your debt agreement is over a longer term).
What Happens to the Debts in the Debt Agreement
A Debt Agreement discharge means the debts which were included in the agreement have now been settled. Your creditors will no longer seek compensation for these debts. The debts you may have to continue paying after your Debt Agreement are your secured debts and debts to the Commonwealth, such as:
- Centrelink debts
- Child support
- SPER debts and fines
- Student HECS, HELP and Student Financial Supplement Scheme debts,
and other debts such as:
- Debts incurred by fraud
- Penalties or other court-ordered payments
Your Debt Agreement Administrator will let you know if you have to continue paying these debts after your Debt Agreement has finished. If you aren't sure, give them a call.
The Impact on Your Credit File
Completing a Debt Agreement is a major step toward financial recovery, but it’s important to understand how it affects your credit file and what steps you can take to rebuild your credit.
Your Debt Agreement will remain on your Credit File for five years from the start date or the length of the agreement, whichever is longer. After this period, it will be removed, and your name will also be cleared from the National Personal Insolvency Index (NPII). While your unsecured debts are resolved, your credit score may initially remain low due to limited financial activity during the agreement.
To rebuild your credit:
- Check Your Credit Report: Regularly review your report for any errors or inconsistencies and ensure the Debt Agreement is removed after the retention period. You can check your credit report for free at ClearScore.
- Make Payments on Time: Consistently paying bills like rent, utilities, or phone plans will help establish positive financial habits.
- Reintroduce Credit Cautiously: Consider using a secured credit card or a small loan to demonstrate responsible credit usage, ensuring repayments are affordable and timely.
- Avoid Risky Credit Options: Steer clear of payday loans or other high-interest products that could derail your progress.
Rebuilding your credit takes time—typically 12-24 months of consistent effort—but the benefits, such as better loan terms and financial independence, are worth the investment. With a clean slate, you have the opportunity to create a strong foundation for your financial future.
Life After a Debt Agreement Discharge
Life after a Debt Agreement discharge is all about financial freedom. Many people become more cautious and better at managing their money, having gone through the stress of financial hardship. Now is the time to take the lessons you’ve learned and make sure you don’t fall back into the same traps.
Here are a few simple steps to help you stay on track:
Start Small
When you’re ready to apply for credit again, it’s a good idea to start with something small. Lenders like to see that you can handle debt responsibly, so a small loan is a good first step. Just make sure you can afford the payments and avoid payday loans—they tend to do more harm than good.
By making consistent, on-time payments for about six months, you’ll show lenders that you’re capable of managing your money again. This will help improve your credit score and put you in a better position to apply for larger loans, like a home loan, with better interest rates.
Don’t commit to financing unless you have the money to make repayments. Use a repayment calculator (try our calculator!) to make sure you can manage the payments over the long term. And don’t forget to build up an emergency fund for those rainy days—it’s one of the best ways to stay financially secure.
Check Your Financial Habits
If you want to keep control of your finances, the best thing to do is know where you are spending your money. By keeping track of your money and your debt you will know your limits and avoid over-committing yourself.
Be sure to put money aside for big bills or unexpected expenses, and try to stay away from credit cards or payday loans. If a large bill comes up that you can’t handle, contact your creditor directly to arrange a payment plan that works for you.
Building a Budget and Managing Money
Your fresh start is the perfect opportunity to develop habits that support financial stability. Crafting a personalised budget is a practical way to stay on track and plan for future financial goals. By tailoring your budget to your needs, you can monitor your spending, identify areas to cut back, and set aside savings for unexpected expenses.
For more guidance, check out our article on Managing Money after a Debt Agreement, which explores strategies like the Snowball and Avalanche methods, increased payment frequency, and creating an emergency fund. These steps can help you maintain control and avoid slipping back into financial stress.
Seek Immediate Help
Life can still throw challenges your way, even after completing a Debt Agreement. If you find yourself struggling financially again, it’s important to act quickly. You won’t be able to enter another Debt Agreement or file for Bankruptcy if you’ve already done so in the last 10 years, but other options, like an Informal Agreement, may still be available. Don’t let your debt get out of control. The sooner you act, the more options you will have available to you.
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Where to Turn for Help
Revive Financial has put together a helpful budgeting guide to assist our clients on the road to financial freedom. You can also turn to the government website MoneySmart for lots of great advice on how to manage your money.
If you’re finding it hard to get back on track, don’t hesitate to give us a call. Our Customer Success Specialists are always happy to chat through your situation and offer advice that suits your needs. You can call us for free on 1800 534 534.
