When you’re facing mounting debt, the road to financial recovery can feel overwhelming and uncertain. Among the options available, Part 9 and Part 10 debt agreements often come up as potential lifelines, helping people avoid bankruptcy while working toward a more stable future. At a glance, they may seem like two versions of the same solution, but there are some key differences that can significantly affect your next steps. From how much debt you can have, to who needs to approve your plan, and how long the agreement lasts, each option follows its own set of rules. The path you choose could influence your financial freedom for years to come.
What is a Part 9 Debt Agreement?
A Part 9 Debt Agreement (Part IX Debt Agreement under the Bankruptcy Act 1966) gives you a clear path to handle overwhelming debt. This legal setup lets you negotiate with creditors to pay a percentage of your total debts within an agreed timeframe.
The Part 9 agreement works differently from informal arrangements. You make payments to a debt agreement administrator instead of paying creditors directly. Your creditors can’t chase you for the remaining original debt once you complete the agreement.
To qualify for a Part 9 Debt Agreement, you must meet the following criteria:
- You’re insolvent (i.e., meaning you can’t pay your debts when they’re due)
- You haven’t been bankrupt, in a debt agreement, or in a personal insolvency agreement in the past 10 years
- Your unsecured debts are less than $144,235
- Your after-tax income is under $108,176.25
- The value of your assets is less than $288,470
A registered debt agreement administrator will help prepare your proposal based on what you can afford. Your proposal must reach the Australian Financial Security Authority (AFSA) within 14 days of signing.
Most agreements last three years, but homeowners may propose an agreement up to five years. Interest charges stop and collection activities against you end during this period.
The Part 9 Debt Agreement sits between informal payment plans and bankruptcy. You get protection from creditors without selling your assets to clear debts. In spite of that, some risks exist (e.g., your name appears on the National Personal Insolvency Index and your credit report for at least five years). This could limit your chances to get credit or certain jobs.
What is a Part 10 Debt Agreement?
A Personal Insolvency Agreement (PIA), also called a Part 10 Debt Agreement, gives you a flexible way to resolve debt without facing all bankruptcy restrictions. The Bankruptcy Act 1966 made this legally binding arrangement between you and your creditors possible under Part 10.
PIAs don’t have any debt, asset, or income limits that determine if you can apply. This makes them perfect if you have big debts and can’t pay them off in one go, but want to stay clear of full bankruptcy.
To be eligible for a Part 10 Debt Agreement, you must:
- Be unable to pay your debts when they’re due
- Live in Australia or have a close connection to Australia
- Not have proposed a Part 10 agreement in the past six months (unless a court gives you permission)
These requirements help ensure the process is fair and only used when truly necessary.
The process begins when you pick a controlling trustee. They take charge of your property and talk to your creditors. Your trustee can suggest three different ways to handle things:
- A deed that lets you pay debts bit by bit or in full over time
- A deed that transfers your property so it can be sold
- An arrangement where creditors agree to smaller payments or instalments
The best part? You and your creditors decide how long your PIA runs. You might even keep your house or car if everyone agrees to it. On top of that, it helps you get debt relief, makes sure creditors get treated fairly, could mean higher payouts than bankruptcy, and lets you keep earning.
Despite this, a PIA will change your financial future. You won’t be able to direct a company until you’ve met all the agreement’s terms. Your name will also stay on the National Personal Insolvency Index forever.
Side-by-Side Comparison
A close look at Part 9 and Part 10 debt agreements shows several key differences that will help you understand which process may be right for you. Both options help you avoid bankruptcy, but they work best for different financial situations and have their own specific requirements.
| Feature | Part 9 Debt Agreement | Part 10 Debt Agreement |
| Debt Limits | Unsecured debts cannot exceed $144,235 | No debt limits apply |
| Asset Limits | Property value should stay under $288,470 | No restrictions on assets |
| Income Limits | Annual after-tax income must stay below $108,176.25 | No income restrictions |
| Creditor Approval Required | Creditors holding more than 50% of debt value must agree | Requires 75% of debt value AND more than half of creditors |
| Duration | 3-5 years (extends to 5 years for homeowners) | Negotiable timeframe based on trustee and creditor agreement |
| Administrator Type | Debt Agreement Administrator handles the process | Controlling Trustee manages the agreement |
| Asset Protection | No specific protection mentioned | Assets like houses and cars can be kept if agreement allows |
| Previous Insolvency Rules | No bankruptcies or debt agreements allowed in last 10 years | Must wait 6 months after previous Part 10 application (unless court allows) |
| Credit Report Impact | Stays on record for minimum 5 years | Remains on file for at least 5 years |
| NPII Listing Duration | Listed for 5 years or 2 years post-completion (longer period applies) | Permanent record on NPII |
| Administrator’s Role | Creates proposal and manages the arrangement | Controls property and negotiates with creditors |
| Location Requirements | No specific location mentioned | Must be Australian resident or have Australian connection |
Making the Right Choice
Choosing between a Part 9 and Part 10 debt agreement depends on your financial situation and long-term goals. Here’s what to keep in mind:
- Eligibility matters: If your unsecured debts, income, and assets are below AFSA’s set limits, a Part 9 agreement may suit you. Go over those limits, and a Part 10 is likely your main option.
- Check the fees: Both options come with proposal and management costs. Ask your administrator or trustee for a full breakdown before you commit.
- Think about your assets: If keeping your home or car is a priority, a Part 10 agreement may offer more flexibility, depending on the terms.
- Know the voting rules: Part 9 agreements need over 50% of creditors (by value) to approve. Part 10 agreements need a tougher 75% approval and more than half of all creditors by number.
- Consider the timeframe: Part 9 agreements usually last up to 3 years (or 5 if you own a home). Part 10 agreements vary based on your deal with creditors.
- Expect credit impacts: Both options will affect your credit rating for at least five years and appear on the National Personal Insolvency Index.
- Get expert advice: Speak to a financial counsellor before deciding. SV Partners is always ready to help you. Contact us today.
Understanding these factors can help you make a clear, confident decision about the best path forward.
Need help deciding between a Part 9 or Part 10 debt agreement?
Understanding the differences is the first step. Choosing the right one for your situation is the next. Whether you’re managing smaller debts or dealing with more complex financial challenges, it’s important to get clear, professional guidance before making any commitments.
As Registered Trustees, SV Partners can explain your options in plain terms and help you take control of your finances with confidence.
Contact us today to book a confidential consultation, or call 1800 246 801 to speak with one of our experienced team members.
