A person who is insolvent may avoid bankruptcy proceedings by proposing a Part IX Debt Agreement.
A Debt Agreement is a legally binding agreement between a debtor and their creditors where creditors agree to accept a sum of money which the debtor can afford. Debt Agreements are a flexible alternative to bankruptcy.
Payment by the debtor is based on their capacity to pay having regard to all their income and household expenses. The debtor is released from their debts when they complete all payments and obligations under the agreement. A Debt Agreement may provide for:
weekly, fortnightly or monthly payments from the debtor’s income;
deferral of payments for an agreed period; and/or
a lump sum payment to be divided among creditors.