In assisting the debtor to prepare a Debt Agreement proposal the Debt Agreement Administrator works with the debtor to establish their circumstances, their household expenses and income for the next year, and decide what the debtor can afford to pay creditors as their best offer.

The Debt Agreement Administrator will then assist in the preparation of the requisite forms including:

Debt Agreement Proposal – identifies the debtor and outlines what the proposal offer is in dollar terms;

Explanatory Statement – informs the creditors about their income, expenses, assets and debts, personal circumstances, household expenses and the reasons for financial difficulty;

Statement of Affairs – sets out in detail their personal information and circumstances, reasons for financial difficulty, sources of income, assets and debts. The completed form is not sent to creditors and is not a public document.

Once the documents are prepared they are lodged with the AFSA. AFSA ensures that the debt agreement proposal satisfies the eligibility criteria and if accepted for processing, records the proposal on the National Personal Insolvency Index (NPII).

Each creditor is sent a report, a copy of the Debt Agreement Proposal, Explanatory Statement and a Statement of Claim and Voting.  Creditors are asked to vote upon the debtor’s proposal by returning the Statement of Claim and Voting form by the deadline date.

If accepted by a majority in value of creditors who vote, the proposal becomes an agreement. AFSA updates the NPII to show the debtor as being in a Debt Agreement.  After a Debt Agreement has been accepted, the debtor must comply with the agreement and ensure it is completed by the completion date listed on the proposal.

If a majority of creditors in value vote to reject the proposal or no creditors vote, then the voting outcome is recorded on the NPII. If the debtor withdraws their proposal or the Official Receiver cancels it, AFSA also updates the NPII with this result. Creditors can commence or continue with action to recover their debts. A debtor can submit a new proposal to send to creditors for voting.