A Debt Agreement is a binding agreement between an individual and his or her creditors, where creditors will accept a sum of money in lieu of the full amount outstanding. A Debt Agreement is an option to assist those with unmanageable debt whose income, assets and creditors are less than the application thresholds, while avoiding the need to declare bankruptcy.
The offer is put forward to creditors based on what the individual can afford and the will term will be determined based on the individual’s proposal. Individuals are then released from the majority of the debts once they comply with the terms of the agreement.
In most circumstances, Debt Agreements are for a term shorter than the three (3) year term of the bankruptcy.