Plain English
What is a Part 9 debt agreement?
A Part IX debt agreement is a formal, legally binding arrangement under the Bankruptcy Act 1966 where you pay an agreed portion of what you owe over a set period, and your creditors agree to write off the rest at the end. It is not a loan, it is not a consolidation, and it is not bankruptcy, although it sits in the same Act.
What your stress is saying
“I've signed away the next three years of my life.”
What's actually true
It's a defined arrangement with an end date.
What your stress is saying
“Everyone can look me up and see it.”
What's actually true
The NPII exists, and almost nobody searches it.
How one actually works
You cannot lodge a debt agreement yourself. You nominate a registered debt agreement administrator, who works with you to build a proposal and lodges it with AFSA. Your creditors then vote on it. If a majority by value accept, the agreement commences.
From then on you make one payment to your administrator rather than paying each creditor separately. The administrator takes their fees, then distributes the rest to your creditors. You have an ongoing obligation to keep them informed about changes in your circumstances.
AFSA charges a fee to lodge a proposal, and administrators charge their own set-up and ongoing fees, which vary. Those fees must be included in the proposal itself, so they are visible before anyone votes on it rather than appearing later.
Who can propose one
There are four eligibility tests, and all of them have to be satisfied. You must be unable to pay your debts when they fall due. You must not have been bankrupt, or had a debt agreement or personal insolvency agreement, in the last 10 years. And your unsecured debts, divisible property and estimated after-tax income for the next twelve months must each sit under a threshold set in the Act.
Those three dollar figures are indexed by AFSA on 20 March and 20 September each year:
- Unsecured debts: $150,950 (s185C(4)(b))
- Divisible property: $301,901 (s185C(4)(c)). Divisible property means property a trustee could sell if you were bankrupt.
- After-tax income: $113,213 (s185C(4)(d))
Figures current at 17 August 2026. AFSA reindexes 20 March and 20 September. Source: AFSA indexed amounts.
What it does not do
This is where most of the misunderstanding sits. A debt agreement releases you from most unsecured debts once you have completed every obligation under it, not before. It does not release secured creditors, who can still seize and sell an asset you put up as security if you fall behind on that particular debt. It does not release anyone who holds a debt jointly with you; a joint account holder remains fully liable.
It is also not a consolidation loan and not an agreement to borrow money, which AFSA states explicitly. Nobody lends you anything. You are agreeing to pay a portion of what already exists.
What happens at the end
When you complete your obligations, the covered unsecured debts are extinguished and your creditors cannot pursue the balance. Your NPII listing does not vanish at that moment. For a completed agreement it runs for five years from the date the agreement was made, or from the date you complete your obligations, whichever is later.
Credit reporting runs separately. AFSA's guidance is that your details may appear on a credit reporting agency's records for up to five years, and longer in some cases. The practical consequence is that finishing your agreement improves your position with lenders immediately and substantially, even though the record itself takes longer to clear.
If you are still deciding
This page is here to explain what a debt agreement is, because a lot of people arrive at this site already in one and having never had it explained properly. It is not advice about whether to enter one, and we are not able to give that advice.
If you are weighing up your options, a free financial counsellor is the right person to talk to. They are independent, they are not selling anything, and the National Debt Helpline is on 1800 007 007. AFSA also publishes an eligibility tool and a comparison of the formal options at afsa.gov.au.
The rule most people find out too late
Above $7,457, you must tell the lender you're in a debt agreement
Under section 269 of the Bankruptcy Act 1966, while you are in a debt agreement you must disclose that fact before obtaining credit above $7,457. This is not a lender policy or a preference. Failing to do it is a criminal offence and serious penalties apply.
In practice it is paperwork rather than an obstacle. A lender who writes in this space expects it and it does not, by itself, cause a decline. The risk is not the disclosure. It is going to a lender who never asks, never records it, and leaves you exposed. We raise it as a matter of course.
Figures current at 17 August 2026. AFSA reindexes 20 March and 20 September. Source: AFSA indexed amounts.
During, just after, or well after: three different answers
Where you sit relative to your agreement changes the lender panel more than anything else about you. Whatever your occupation, this is the shape of it:
- Still in the agreementThe smallest panel. A handful of specialist lenders write here, and they want agreement payments up to date, no new defaults since it started, and stable income. The s269 disclosure applies above $7,457.
- Recently completedA noticeably wider panel, and the moment most worth checking. It is common for someone declined a year earlier to be approved shortly after completion with nothing else in their life having changed. Make sure the completion is formally recorded before applying.
- Completed more than 12 months agoWider again, with better pricing available. The agreement may still appear on your credit file. AFSA's guidance is up to five years, and longer in some cases. A year of clean conduct behind you changes how it is read.
What this site does, and what nobody here can do
This site can
- Explain how lenders read a debt agreement
- Pass your enquiry to Simple Loans, who arrange the finance
- Tell you plainly when the answer is “not yet”
Nobody here can
- Provide credit, or credit assistance, from this website
- Advise you to enter, change or end an agreement
- Negotiate with your creditors or administrator
- Remove or dispute anything on your credit file
This website provides information only. Advising on an agreement, negotiating with creditors and fixing credit files are debt management services, which require a credit licence authorisation Simple Loans does not hold. For help with the agreement itself, speak to your registered administrator, or the National Debt Helpline on 1800 007 007 which is free, independent, and not selling anything. There is also a plain-English explainer here.
Common questions
Is a Part 9 debt agreement the same as bankruptcy?
No, though both are formal options under the Bankruptcy Act 1966. A debt agreement is an arrangement to pay an agreed portion of what you owe over a set period, administered by a registered debt agreement administrator. Bankruptcy is a separate process with different consequences. AFSA notes that proposing a debt agreement is itself an 'act of bankruptcy', which means creditors could use it to apply to the court to make you bankrupt.
How long does a Part 9 debt agreement last?
Up to three years, or up to five years if you own your home. The exact term is set out in the proposal your creditors voted on. Completion happens when you have met all your obligations under the agreement, not simply when the term expires.
What are the eligibility limits?
To propose a debt agreement you must be unable to pay your debts when they are due, must not have been bankrupt or had a debt agreement or personal insolvency agreement in the last 10 years, and your unsecured debts, divisible property and after-tax income must each sit below thresholds AFSA indexes twice a year. As at August 2026 those are $150,950 in unsecured debts, $301,901 in divisible property and $113,213 in after-tax income.
How long does it stay on my credit file?
AFSA's guidance is that your details may appear on a credit reporting agency's records for up to five years, and longer in some cases. Separately, your name appears on the National Personal Insolvency Index. For a completed agreement that listing runs for five years from the date the agreement was made, or from the date you complete your obligations, whichever is later. The two records are different things on different clocks.
Does a debt agreement clear all my debts?
No. It releases you from most unsecured debts once you complete all your obligations and payments. It does not release secured creditors, who can still seize and sell assets you offered as security if you fall behind, and it does not release anyone who holds a debt jointly with you. Some debts cannot be included at all.
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