A debtor who proposes a Debt Agreement commits an Act of Bankruptcy. A creditor can use this to apply to court to make the debtor bankrupt if the proposal is not accepted by creditors.

The debtor’s name and other details appear on the National Personal Insolvency Index (NPII), a public record, for the proposal and any Debt Agreement.

The ability of the debtor to obtain further credit is affected. Details may also appear on a credit reporting organisation’s records for up to seven years.

During the voting period creditors cannot take debt recovery action or enforce a remedy against the debtor or the debtor’s property; and must suspend deductions by garnishee on debtor’s income. Also, sheriffs are unable to execute judgment debt.

Do not leave it too late. Under some circumstances it may be too late to implement a workout or restructuring plan to prevent bankruptcy.