Debt Agreements in Australia (Part IX): Eligibility, Voting and Terms

A Part IX debt agreement is a formal, federal alternative to bankruptcy under the Bankruptcy Act 1966 (Cth) that lets an eligible debtor put a single proposal to creditors, who accept or reject it by a majority-in-value vote, without the debtor being declared bankrupt.

This page covers who can propose a debt agreement, how creditors vote on it, the registered administrators who run it, how long it can last, what changed in the 2018 and 2019 reforms, and how it compares to bankruptcy on your credit file and the public record. If the eligibility caps below rule you out, see personal insolvency agreements, the other formal option that carries no eligibility ceiling but costs more to set up. For the bankruptcy process itself, see how bankruptcy works, and for what bankruptcy does to your credit file and the public record, see the consequences of bankruptcy. Start at the bankruptcy hub for all three formal options side by side.

Who can propose a debt agreement: the single indexed threshold

Section 185C(4) of the Bankruptcy Act sets three caps a debtor must fall under before they can propose a debt agreement: unsecured debts, the value of divisible property (property that could be sold by a trustee if the debtor were bankrupt), and after-tax income for the coming year. All three trace back to one figure section 185C(5) calls the threshold amount, defined as 7 times a specific rate component of the Age Pension under the Social Security Act 1991. The unsecured-debts cap equals the threshold amount itself; the property cap is twice the threshold amount; and the income cap is three-quarters of the threshold amount.

On AFSA's current indexed-amounts table, that works out to $150,950.80 for unsecured debts, $301,901.60 for divisible property (exactly double the debts figure), and $113,213.10 for income (exactly three-quarters of it), current on AFSA's page as of 18 August 2026. AFSA updates these figures on 20 March and 20 September each year, tracking Age Pension indexation, so check AFSA's indexed-amounts page directly for the current numbers rather than relying on a fixed figure from this page.

A debtor is also barred from proposing a debt agreement if, in the 10 years immediately before the proposal, they have been bankrupt, been a party to a debt agreement, or given a personal insolvency agreement authority under section 188, per section 185C(4)(a). An exception applies if that earlier bankruptcy was later annulled under section 153B.

Proposing a debt agreement and how creditors vote

A debtor doesn't lodge a proposal directly; a registered debt agreement administrator prepares and submits it on the debtor's behalf under section 185C. The proposal must identify the debtor's property, authorise the administrator (or a trustee) to deal with it, provide that provable debts rank equally and are paid proportionately, and be accompanied by a statement of affairs and the administrator's certificate confirming they have reasonable grounds to believe the debtor can meet the obligations.

Once the Official Receiver accepts the proposal for processing, typically within 14 days of the debtor signing it, it's recorded on the National Personal Insolvency Index and a freeze takes effect under section 185F: creditors can't pursue the debtor's person or property over a frozen debt until the proposal is decided.

Creditors then vote, and this is where a common assumption goes wrong. Section 185EC(1) accepts a proposal if a majority in value of the creditors who reply before the deadline vote yes. There's no requirement for a majority in number as well, the mechanism used for some other insolvency arrangements. Creditors who don't respond simply aren't counted; their silence is neither a yes nor a no. The proposed administrator, and anyone who was their related entity when they became a creditor, is excluded from voting, and offering a creditor anything of value to influence their vote is an offence carrying up to 6 months' imprisonment. The Official Receiver can also cancel a proposal already accepted for processing before the vote if, for example, undisclosed creditors turn up or the statement of affairs was materially deficient.

Registered debt agreement administrators

Only the Official Trustee, a registered trustee, or a registered debt agreement administrator can be named to run a debt agreement. Administrators are registered under section 186D, a track separate from the Schedule 2 registration bankruptcy trustees use, though a registered trustee can also act as a debt agreement administrator. Registration lasts 3 years from the date it's entered on the National Personal Insolvency Index, renewable, and the Inspector-General can attach conditions to it. In practice, per AFSA, the administrator works with the debtor and creditors to agree a proposal, collects the debtor's monthly payments, deducts their own fees, and pays the balance to creditors.

How long a debt agreement lasts

A debt agreement can't require payments beyond 3 years from the day it's made, unless the debtor has an interest in real property in Australia that is their principal place of residence at the time they give the proposal to the Official Receiver, in which case it can run up to 5 years under section 185C(2AA) to (2AD). That extension comes with a condition: if the term goes past 3 years on this basis, the home itself can't be property the agreement deals with. This 3-year and 5-year structure was written into the Act by the 2018 reform; before that, the Act didn't set an explicit statutory cap of this kind, though this page doesn't independently confirm what constrained agreement length before 2019.

The 2018 and 2019 reforms

The Bankruptcy Amendment (Debt Agreement Reform) Act 2018 (No. 118 of 2018) was assented to on 27 September 2018, with most of its substantive changes commencing on 27 June 2019 and one further division commencing on 27 September 2019. Reading the amending Act's own operative schedule confirms four changes now in force:

• The divisible-property cap was doubled, from equal to the threshold amount to twice the threshold amount, which is the rule described above.
• A new affordability gate was added: unless the debtor qualifies for the home-owner term extension, a debtor also fails eligibility if a formula-based ratio of proposed payments to income exceeds a percentage the Minister sets by legislative instrument, unless the proposed administrator certifies, after reasonable inquiries, that the debtor can likely still meet the obligations. Certifying without making those inquiries is a strict-liability offence.
• The current 3-year and 5-year term limits, including the home-interest carve-out, were written into the Act for the first time.
• The registration regime for administrators was overhauled, covering applications, conditions, mandatory professional indemnity and fidelity insurance, cancellation, trust accounts, and the Inspector-General's oversight functions.

AFSA's plain-language guidance also describes a further extension to 5 years for substantial and unforeseen changes in a debtor's circumstances, but this page does not independently confirm the mechanism behind that route, so treat it as a possibility to raise with a registered administrator rather than a rule stated here.

Effect on your credit report and the National Personal Insolvency Index

Unlike bankruptcy, a debt agreement doesn't stay on the National Personal Insolvency Index or your credit file indefinitely, and how long it stays depends on the outcome:

• Completed, meaning the debtor meets all their obligations: listed until 5 years from the date the agreement was made or the completion date, whichever is later.
• Terminated by order: removed within 1 month after the later of 5 years from the agreement date or 2 years after the termination order.
• Declared void: the same timing as terminated.
• Withdrawn, rejected by creditors, cancelled, or lapsed: listed for just 1 year from that event.

Your name and date of birth can never be withheld from the National Personal Insolvency Index, though your address and some other details can be, on safety grounds. Separately, AFSA says your details may appear on a credit reporting agency's records for up to 5 years, or longer in some cases; ASIC's MoneySmart covers general credit-reporting rules in more detail. One caveat applies from the moment you propose an agreement, not just if it fails: proposing a debt agreement is itself an act of bankruptcy, so creditors can apply to the court to make you bankrupt while the proposal is pending or after it doesn't succeed.

How a debt agreement compares to bankruptcy

AFSA's own comparison table sets out several confirmed differences, and two that most people assume are bankruptcy-only but actually apply to both:

The two that catch people out: disclosure obligations to a business's trading counterparties, and professional-body or statutory-position conditions, both apply during a debt agreement too, not just during bankruptcy. Only bankruptcy carries the flat bar on being a company director; that specific consequence comes from section 206B of the Corporations Act 2001, not the Bankruptcy Act itself.

Fees

Lodging a debt agreement proposal costs $200, current on AFSA's fee schedule as of 18 August 2026. Trustees and administrators also apply a realisations charge of 7% of money they receive across bankruptcies, debt agreements, compositions, and personal insolvency agreements, a figure that comes from AFSA's fee page rather than an independently checked rate-setting instrument. Beyond these AFSA-level charges, the administrator deducts their own agreed fees from the debtor's payments before passing the balance to creditors.

Frequently Asked Questions

Is a debt agreement accepted by a majority in number of creditors, or a majority in value?

By value alone. Section 185EC(1) accepts a proposal if a majority in value of the creditors who reply before the deadline vote to accept it; there's no separate majority-in-number requirement, and creditors who don't respond aren't counted either way.

How often do the eligibility caps for a debt agreement change?

AFSA updates the three indexed caps on 20 March and 20 September each year, tracking Age Pension rate indexation. Check AFSA's indexed-amounts page for the current figures rather than relying on a number that may have already been superseded.

Can I propose a debt agreement if I've been bankrupt before?

Not if that bankruptcy, an earlier debt agreement, or a personal insolvency agreement authority falls within the 10 years before your proposal, under section 185C(4)(a), unless the earlier bankruptcy was later annulled under section 153B.

How long does a debt agreement stay on my credit file and the National Personal Insolvency Index?

It depends on the outcome. A completed agreement stays listed until 5 years from when it was made or the completion date, whichever is later; a terminated or voided one is removed within 1 month after the later of 5 years from the agreement date or 2 years after the order; a withdrawn, rejected, cancelled, or lapsed proposal is listed for just 1 year.

How much does it cost to lodge a debt agreement proposal?

The AFSA lodgement fee is $200. The registered administrator running the agreement also takes their own agreed fees out of the debtor's payments before passing the balance to creditors, separately from AFSA's charge.

Does proposing a debt agreement stop creditors from making me bankrupt?

No. Proposing a debt agreement is itself an act of bankruptcy, so creditors can still apply to the court to have you declared bankrupt while the proposal is pending or if it doesn't succeed.