Join our mailing list to stay informed!
Posted by Revive Financial on Nov 3, 2016 12:00:00 AM

If you are in a lot of debt and financial trouble or are at risk of financial trouble, an important term to become familiar with is debt agreement.

Debt agreements can decrease your financial obligations – the amount of money you owe – helping you to avoid bankruptcy.

Debt agreements are frequently used by Australians in financial trouble. They have helped Australian homeowners save their homes, cars, and businesses. While they benefit many people, they aren’t the right option for everybody. To help determine whether a debt agreement suits your personal situation, it is worth reading what is involved in a debt agreement.

What is a Debt Agreement?

When you don’t need to declare bankruptcy, but you recognise that you will not be able to pay your debts in full, a debt agreement can be used. Essentially, it is a formal agreement between you and your creditors. If an agreement is signed, you will still owe your creditors, but you will owe them a lesser amount.

Why would creditors accept a lesser amount? If you declare bankruptcy, then your creditors will receive no money at all. Instead of receiving nothing, your creditors may agree to the terms of the debt agreement because they recognise that is better to receive a portion of your debt owing than it is to receive nothing at all.
Formally, as the 1966 Bankruptcy Act states, a debt agreement is a binding agreement between a debtor and their creditors where creditors agree to accept a sum of money which the debtor can afford.

How is a Debt Agreement Made?

To create a formal debt agreement you will need to work with a debt agreement administrator, such as Revive Financial. They can help you identify the correct forms and submit them.

Here’re the basics of what happens:

  1. You outline the amount of your debt you will be able to meet and create a formal document agreeing to pay that amount – this is the debt agreement proposal.
  2. You send that document to your creditors.
  3. Your creditors will review your proposal and decide whether they support it.
  4. If it is supported by your creditors, your debts owing will be changed to the amount specified in the agreement.

Are You Eligible to Propose a Debt Agreement?

Debt agreements can be attractive financial tools, but they are not available to everyone. To be eligible to propose a debt agreement, you must:

  • Be insolvent – you’re unable to pay your debts.
  • Have not been bankrupt or had a debt agreement in the last 10 years.
  • Have unsecured debts, assets and after-tax income for the next 12 months all less than the indexed amounts.

Can a Debt Agreement Improve Your Financial Situation?

If you can see the benefits of a debt agreement to your financial situation, you can approach Revive Financial to speak to an insolvency expert and determine the best financial path for you to follow. If your situation is best aided by a debt agreement, we will create an attractive proposal to your creditors to lower your debt burden to a manageable level. Contact us on 1800 534 534 and discuss your financial future today.

For more information on personal insolvency, check out our personal insolvency page here.


Topics: Personal Insolvency, Debt Agreements, Personal Debt, Debt Management Solutions

How Can We Assist You Today?

Personal Debt Icon Personal
Business Debt Icon Business
Please select an assistance option to continue.

Types Of Unsecured Debts

Credit Card Icon Credit/Store Cards
Personal Loan Icon Personal Loan
Pay Day Loan Icon Pay Day Loan
Tax Debt Icon Tax Debt
Disconnected Utilities Icon Utility Bill
Other Debts Icon Other
Please select at least one type of unsecured debt.

Your Business Structure

Sole Trader Icon Sole Trader
Partnership Icon Partnership
Company Icon Pty Ltd Company
Tax Debt Icon Trust
Please select at business structure to continue.

Unsecured Debt Amount


Business Debt Amount


Take Back Control Today!

First Name

Last Name


Phone Number

Phone number must be 10-digits long and begin with a 0. (e.g. 04 1234 5678)

Post Code

Post code must be 4-digits long (e.g. 4567)

Some of your details appear incorrect.
Please update the highlighted fields and re-submit.


You’ve taken the first step to steer your business back to viability

Let’s keep the momentum going, take the second step by linking your Xero account now.


You've taken the first step to becoming debt free

Let's keep the momentum going, take the second step now and complete the assessment form.

By submitting this form you acknowledge that you have read and accept our Privacy Policy