DEBT AGREEMENT PART 3 of 5

Explaining The Procedure:

1.The debtor must read the prescribed information about the alternatives and consequences of bankruptcy and debt agreements.

2.The debtor completes and lodges three forms with ITSA (Insolvency Trustee Service Australia): a debt agreement proposal: an explanatory statement: a statement of affairs:within 14 days of signing.
If an administrator consents to administer the debt agreement they must lodge a certificate that they have reasonable grounds to believe that the debtor has disclosed all the information required and is likely to be able to make the payments due over the period of the agreement.

3.ITSA gathers and checks all the information then ITSA sends a Proposal to creditors including an explanatory statement to creditors, asking them to detail their debts and vote on the proposal.
A secured creditor is entitled to vote and receive dividends on any unsecured part of their debt. Alternatively a secured creditor may chose not to receive a dividend and rely on their security. Secured creditors rights in relation to dealing with either security are not affected by a debt agreement.

4.For the proposal to be accepted, ITSA must receive yes votes from a majority in value of the creditors who vote.
If the proposal is accepted by creditors the debt agreement administrator is responsible for: collecting payments from the debtor: keeping creditors and debtors informed:paying dividends to creditors:telling ITSA when the debt agreement is completed.
If the proposal is not accepted by creditors: it remains on the NPHI(National Personal Insolvency Index) and on the records of credit reference agencies: creditors are able to commence recovery action including for accrued interest.