Part 9 debt agreements explained: eligibility, consequences, costs and the alternatives

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Kim and Bob, MyBudget clients, sharing their journey to becoming debt-free after finding the right solution for their circumstances.

A Part 9 debt agreement is a legally binding arrangement under the Bankruptcy Act. It is recorded on your credit report for at least five years and listed on a public register. Before signing one, it is worth understanding exactly what it does — and what the alternatives are.

MyBudget’s first appointment is free and obligation free. Call 1300 300 922.

Get free independent advice first

The Australian Government funds the National Debt Helpline on 1800 007 007, offering free, independent and confidential financial counselling. ASIC’s MoneySmart site publishes free guidance on formal debt options. Speaking to MyBudget does not commit you to a debt agreement.

What a Part 9 debt agreement actually is

A formal insolvency arrangement in which you offer your unsecured creditors a set amount, usually paid as one regular repayment over a fixed period, in settlement of what you owe.

It is not a loan, and it is not bankruptcy — though it is a formal insolvency arrangement and appears on the same public register.

Only unsecured debt counts

Unsecured debt has no asset attached as security: credit cards, personal loans, store cards, buy now pay later accounts and most utility bills. Secured debt — your mortgage or a car loan — sits outside the agreement.

Joint debts work differently

A debt agreement covers your share. A jointly held debt does not simply vanish for the other party.

How the process works

1. Proposal preparation. You appoint a registered debt agreement administrator, who reviews your income, assets and debts and helps build a proposal setting out what you can afford and over what period.

2. Lodgement with AFSA. The proposal goes to the Australian Financial Security Authority for processing.

3. Creditor vote. Once AFSA accepts it, creditors generally have 35 days to vote. Not all must agree — the proposal passes if creditors holding a majority by dollar value of the votes cast say yes. If it passes it binds every unsecured creditor with a provable debt, including those who voted no or did not vote.

4. A fixed period of repayments.

Eligibility

To be eligible you must be insolvent, must not have been bankrupt or in a debt agreement in the last 10 years, and must fall below statutory thresholds for unsecured debt, assets and after-tax income. Those thresholds are set and indexed by AFSA — check current figures with AFSA or your administrator rather than relying on a figure quoted elsewhere.

The consequences to weigh

Your credit report

A debt agreement can make it much harder to obtain new credit. It is recorded on your credit report for at least five years from the date it starts, and in some circumstances longer.

The public register

Your agreement is recorded on the National Personal Insolvency Index (NPII), a public register including your name, date of birth and address. If you complete the agreement, the record is generally removed five years after it was made, or when your obligations are complete, whichever is later.

Day-to-day restrictions

While the agreement is in force you must disclose it when applying for credit above a set limit, which is indexed and published by AFSA. There can also be practical consequences for renting and for certain occupations.

What it costs

The cost includes an AFSA proposal-lodgement fee, the administrator’s fees and government levies. These are regulated and published in AFSA’s official fees and charges directory, and are typically built into your single regular repayment.

AFSA’s current fee schedule lists a $200 debt agreement proposal lodgement fee. Some administrators also charge their own setup fee, so confirm all current costs with AFSA or your administrator before proceeding.

The alternatives worth exploring first

How MyBudget fits in

MyBudget’s role is to help you see the whole picture before you sign anything — building a realistic 12-month budget, negotiating with creditors, automating repayments and, where the budget allows, building a buffer for unexpected costs.

MyBudget is not a registered debt agreement administrator. If a Part 9 agreement does appear suitable, MyBudget explains the next steps and can connect you with its sister company MyDebtSolutions, a registered administrator, which assesses eligibility, explains the fees and consequences, prepares the proposal and lodges it with AFSA.

Questions about debt agreement

Why should I speak to MyBudget before signing a debt agreement?

Speaking with MyBudget first can help you understand whether you need a Part 9 debt agreement at all. We review your complete financial position, build a realistic 12-month budget and explore other options that may have less impact on your credit record and future borrowing. This helps ensure you have considered every suitable pathway before committing to a formal insolvency solution with lasting consequences.

What are the benefits and risks of a Part 9 Debt Agreement?

A Part 9 Debt Agreement can provide an affordable repayment pathway and may stop covered creditors adding interest or pursuing payment once it begins. However, it is a formal insolvency arrangement that can affect your credit report, future borrowing and public insolvency record. It also includes fees and does not remove a secured lender’s rights over your home or car. Explore suitable informal options and understand the consequences before proceeding.

How can MyBudget help me decide whether a debt agreement is right for me?

MyBudget can review your income, expenses, debts, assets and priorities, then build a realistic 12-month budget showing what you may be able to afford. This can help you compare informal creditor arrangements, debt consolidation and formal insolvency options. Speaking to MyBudget does not commit you to a debt agreement. You can also contact the National Debt Helpline for free, independent and confidential financial counselling.

What types of debt solutions can MyBudget and MyDebtSolutions help with?

Depending on your circumstances, MyBudget may help with structured budgeting, hardship applications, collections support and plans to catch up on arrears. This support can relate to credit cards, loans, overdue bills, rent, rates, tolls, tax debts, legal fees or fines. If a formal Part 9 debt agreement is appropriate, MyBudget can introduce you to MyDebtSolutions, a registered Debt Agreement Administrator.

Can I enter a Part 9 debt agreement if I own a home?

Owning a home does not automatically rule you out, but you must meet the Part 9 eligibility limits for income, unsecured debt and divisible assets. Your mortgage remains outside the agreement, so you must continue making repayments and your lender can still act if you fall behind. A debt agreement may also affect refinancing and future borrowing, so consider your longer-term property goals before proceeding.

Can a Part 9 debt agreement remove debts or defaults from my credit file?

No. A Part 9 debt agreement cannot remove accurate debts, defaults or other correct information from your credit report. The agreement itself will also be recorded on your credit report and the NPII for the applicable periods. MyBudget can help you understand the likely credit impact, review your complete financial position and explore less restrictive options before you commit to formal insolvency.

How do I apply for a Part 9 debt agreement?

MyBudget can help you take the first step by reviewing your income, expenses, debts and assets and building a realistic 12-month budget. If a Part 9 debt agreement appears suitable, we can explain the next steps and connect you with our sister company, MyDebtSolutions, a registered debt agreement administrator. MyDebtSolutions will assess your eligibility, explain the fees and consequences, prepare your proposal and lodge it with AFSA for your creditors to vote on.

Important information

This page provides general information only. It does not take your personal circumstances into account and is not personal financial advice. For the scope and licensing of a particular service, check the service provider's current disclosures or contact MyBudget.

Free, independent and confidential financial counselling is available from the National Debt Helpline on 1800 007 007, and ASIC’s MoneySmart website publishes free guidance. MyBudget is not a registered debt agreement administrator; where a Part 9 debt agreement appears suitable, MyBudget can refer you to its sister company MyDebtSolutions, which is a registered administrator.

Call MyBudget on 1300 300 922 for a free, confidential, no-obligation appointment. Your personalised 12-month budget is free and yours to keep.

What is a Part 9 Debt Agreement?

A Part 9 Debt Agreement (also called Part IX) is a legally binding, formal insolvency agreement under the Bankruptcy Act 1966 in Australia. It lets individuals who cannot repay their unsecured debts in full propose an affordable repayment arrangement with their creditors over an agreed period of time, as an alternative to bankruptcy.

What are the stages involved in setting up a Part 9 Debt Agreement?

The process has four stages: 1) Proposal preparation, where a registered debt agreement administrator reviews your income, assets and debts and helps build a proposal showing what you can afford to pay and over what period; 2) Lodgement with AFSA (the Australian Financial Security Authority) for processing; 3) A creditor vote, where creditors generally have 35 days to vote and the proposal passes if creditors holding a majority by dollar value agree, binding all unsecured creditors; 4) Regular repayments, where you make one payment to your administrator, who deducts fees and distributes the rest to creditors.

How long does a Part 9 Debt Agreement typically last?

Most Part 9 debt agreements run for three years, although longer terms of up to five years may be possible in some circumstances, including for homeowners.

Does interest keep accruing on debts covered by a Part 9 Debt Agreement?

No. Once a Part 9 debt agreement begins, covered unsecured creditors generally cannot add further interest to those debts.

Will creditors still contact me directly once I'm in a Part 9 Debt Agreement?

No. Your appointed administrator manages the agreement, and creditors cannot pursue you directly for payment on the debts covered by the agreement.

What types of debts are typically covered by a Part 9 Debt Agreement?

A Part 9 Debt Agreement generally covers unsecured debts such as credit cards, personal loans, store cards, Buy Now, Pay Later (BNPL) debts, unsecured lines of credit, and certain unpaid utility bills.

Who processes and approves a Part 9 Debt Agreement proposal?

The proposal is lodged with the Australian Financial Security Authority (AFSA) for processing, and after AFSA accepts it, creditors vote on whether to approve it.

What does MyBudget recommend before entering a Part 9 Debt Agreement?

According to the page, MyBudget encourages people to speak with them first and compare all their debt solutions before deciding on a Part 9 Debt Agreement, and offers a free appointment to discuss options.

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