Informal Debt Agreement: Debtstroyer Agreement

An informal Debt Agreement is a way to get out of debt without suffering through the long term consequences of a Part 9 Debt Agreement or Bankruptcy. An informal Debt Agreement allows you to renegotiate the terms of your debt to settle on a new repayment arrangement – one which you can afford.

At Debt Rescue, we speak to hundreds of Aussies each week who are exhausted and confused by their debts. When it comes to providing them with options for debt relief, we noticed there were very limited option for people who wanted to protect their credit file, or if they didn’t qualify for a Part 9 Debt Agreement. We strive to provide a holistic approach to debt relief and saw we could help these people with a Debtstroyer Agreement.

The difference between a formal Debt Agreement and an Informal Debt Agreement

An informal debt agreement is much like a formal debt agreement in that it allows you to reduce your debt, freeze your interest and make your repayments in peace. The key difference is, unlike a formal debt agreement, an informal debt agreement won’t impact your credit file like a Debt Agreement would.

It won’t impact your credit file

The reason for this is because formal Debt Agreements are legally binding contracts managed by the Australian Financial Security Authority (AFSA). So when you enter into a Formal Debt Agreement, your name is listed on the National Personal Insolvency Index (NPII). The NPII is a list of all the people in Australia who have become insolvent – that is, declared bankruptcy or entered into a Part 9 Debt Agreement. It contains your basic information and can be accessed by anyone for a fee. The reason your name is listed on the NPII when you enter a formal Part 9 Debt Agreement is because Debt Agreements are an act of bankruptcy. A formal debt agreement will also be listed on your credit file for up to 8 years which can make it hard to find finance once the agreement is over.

On the other hand, an Informal Debt Agreement is negotiated privately with your creditors so your name won’t be listed on the NPII. An informal debt agreement is not an act of bankruptcy and the agreement itself won’t be noted on your credit file. This makes an informal Debt Agreement a great debt relief solution for people, such as real estate agents or some trades people who can’t work or operate if they are bankrupt.

It doesn’t have limiting criteria

While formal debt agreements have stringent criteria and guidelines, Informal debt agreements operate outside of those restrictions. So if you are earning over the maximum income level or have too much debt for a formal debt agreement, you may be able to use an informal debt agreement to gain control of your finances.

At a Glance

Formal AgreementInformal Agreement
Act of BankruptcyYesNo
Noted on Credit FileYesNo
Noted on NPIIYesNo
Minimum Debt Amount$10,000$10,000
Maximum Debt Amount$107,307.20Nil
Maximum Income Level (net)$80,408.40Nil

 

The benefits of an Informal Debt Agreement

An Informal Debt Agreement can be your secret weapon against bad debt. As soon as you enter an Informal Debt Agreement your creditors must cease any recovery action so you won’t receive any more harassing phone calls. The professional Debt Negotiators at Debtstroyer can work to reduce your debt through a number of ways. These include:

  • Refinancing your loan
  • Freezing Interest and Fees
  • Settling your debt by paying a reduced amount in a lump sum payment
  • Settling your debt by paying a reduced amount over an agreed period of time
  • A number of these strategies combined

As soon as you have repaid your debt and the Informal Agreement is over, you can get back to leading a very normal life. The agreement itself won’t be marked on your credit file, however if you are in debt it is likely you may have defaults of judgements listed on your credit file already.

What you need to know

Because an informal debt agreement operates outside the legislation of the Bankruptcy Act, there are a few things you need to be wary of. For example, your creditors must vote to approve either a formal or informal debt agreement. When you are seeking a formal debt agreement, you only need 50% of the votes for it to be approved. However with an informal debt agreement, 100% of your creditors need to be in favour of the agreement. Also, if you break the terms of your informal debt agreement, such as consistently missing repayments without explanation, your creditors can reinstate your original debts and start recovery proceedings.