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Debt Agreement And How It Helps Your Financial Status

By Bob Hop

If you have a lot of debts and you are incapacitated to pay everything that your creditors demand from you, then you ought to apply for debt agreement. Debt agreement is a legal agreement between a creditor and a debtor under the Australian Bankruptcy Act. This Act was first introduced in 1997 and it aims to provide alternative to debtors by allowing them to pay only a part of the money they owe to their creditors that they can afford.

Debt agreement is managed by a registered debt agreement administrator (RDAA). The role of the administrator is that they are the ones who receive the money from the debtors and pay the money to the creditors thus arguments and disputes are avoided. The debt agreement administrators work under the Commonwealth Government Department and Insolvency and Trustee Service Australia (ISTA).

The advantage of applying for debt agreement is that minimum wage earners can get out from their debts even if they do not pay the entire money that they loaned from their creditors. Now if you decide to enroll in debt agreement, your RDAA will give you a full proposal which will then be submitted to the ISTA coupled with your financial statements. The ITSA will then assess your application and will see whether you are qualified to get debt agreement.

However, before your application will be approved, the ISTA will need to call a meeting with all of your creditors to discuss the proposal made by your RDAA. If the creditors agree to the proposal, then you will be released from some of the money that you owe from your creditors. If not, then no action will be taken and you need to continue paying your creditor with the full amount that you owe them.

Once you get approved for debt agreement, you will get a notation on your financial statements. However, debt agreement is different from bankruptcy because your financial statement will not be cleaned thus the history of your debts will still be reflected in your financial statements even if you have paid your debts already. Also, while under debt agreement, you are forbidden to make any debts for seven years.

Debt agreement administrators are audited annually to make sure that they are following the system when it comes to making proposals for debt agreement. On the other hand, the purpose of debt agreement is to reduce the number of people in debt. Although this may be the case, the rise of people who file for bankruptcy has increased in recent years.

You’ll be able to get additional details right here on debt relief and debt agreement associated doubts and solutions.

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Article Citation
MLA Style Citation:
Hop, Bob "Debt Agreement And How It Helps Your Financial Status." Debt Agreement And How It Helps Your Financial Status. 28 Apr. 2012. 2 Aug 2014 <>.

APA Style Citation:
Hop, B (2012, April 28). Debt Agreement And How It Helps Your Financial Status. Retrieved August 2, 2014, from

Chicago Style Citation:
Hop, Bob "Debt Agreement And How It Helps Your Financial Status"

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