Debt Agreement (in the context of the Bankruptcy Act)
A debt agreement is a binding agreement between an entity owing and their creditors, where the entity owing pays a set amount over a set period of time, to settle larger debts that could not be paid, because the entity owing did not have sufficient funds to pay. Repayments are made to a debt agreement administrator, as opposed to the creditors directly, and after the payments are completed and the agreement ends, the creditors cannot recover the rest of the money originally owed. A debt agreement can be a flexible way to settle debts without becoming bankrupt.
A debt agreement is made under section 185H of the Bankruptcy Act 1966 (Cth) resulting from the acceptance of a debt agreement proposal. A debt agreement proposal is a written proposal under subsection 185C(1) of the Bankruptcy Act. Section 185H(2) states “If: (a) a debt agreement proposal is accepted; and (b) the proposal is not expressed to be subject to the occurrence of a specified event within a specified period after the proposal is accepted; then: (c) the Official Receiver must enter details of the debt agreement concerned on the National Personal Insolvency Index; and (d) the debt agreement is made in the terms of the proposal when those details are so entered.