The Bankruptcy Act (1966) (Cth) gives two alternatives for people considering filing for Bankruptcy.

Part IX Agreement:

This is a formal debt agreement reached between a debtor (person who owes money) and a creditor (to whom money is owed).

These agreements work best for those who have a low income, minimal assets and a lower amount of debt.

In order to enter into one of these agreements the debtor makes a formal proposal to the creditors to pay all or part of the debts.  The creditor can accept the proposal or continue to take action as they deem necessary such as legal proceedings for the recovery of the monies owing.

A debtor must meet the following criteria in order to be able to make a part IX Agreement;

Not have been bankrupt before or signed a part X agreement in the last 10 years;
Have unsecured debs of less than $71,526.00;
Have after tax income of less than $52,907.00 per annum;
Have property NOT exempt under bankruptcy of less than $71,526.00.

Part X Agreement:

The only main difference with this agreement is that there is no upper limit on the amount of debt owed by the debtor.  This agreement would be used when the debt exceeds $71,526.00.

As can be seen there are other alternatives to Bankruptcy that people should be aware of.  These agreements are public record and recorded with ITSA but are a better alternative to bankruptcy for some people.  We advise that you should obtain independent advice from a solicitor and/or accountant with respect to the options available to you in the event that you find yourself in financial strain.

Feel free to call Hatzis Lawyers on 1300 HATZIS for further information or to book a consultation time.