A Guide to Refinancing your Part 9 Debt Agreement

Can I refinance my Part 9 Debt Agreement?

Part 9 Debt Agreements (PIA - Personal Insolvency Agreement PIA) have caused much confusion over the years. As a result, we find many people don't fully understand their Part 9 Debt Agreement. Although new guidelines and compliance is giving assurance to clients.

Part 9 Debt agreement consolidation can offer significant financial benefits. However, in most cases a debt agreement consolidation requires real estate for security and a refinance home loan to pay it out.

I don't fully understand my debt agreement? 

Known by many names, debt agreements have previously been misrepresented. As such, we find many people more worried about debt agreements than what is required. Indeed, all financial & insolvency solutions must be appropriately assessed and deemed as suitable.

There are strict criteria and government regulations regarding any consumer finance and debt solutions. Also, debt agreement administrators are audited to ensure client suitability.

What are the available debt solutions?

  • Initially, part 9 debt agreements are often suitable if you earn income, have limited equity or don't own real estate.
  • Secondly, full bankruptcy is most suitable when there is no income, or limited assets that a trustee can sell.
  • Home Loan Debt Consolidation can be suitable when there are sufficient equity and income. Also, bad credit history is accepted with a story of how it happened.
  • Also, Unsecured Personal Loan Debt Consolidation has minimal benefits. Because, when there is poor payment history on debts or credit defaults, the loan amounts can be severely restricted.
  • Finally, informal payment agreements are usually established to reduce payments. However, payment terms can be quite long, and you may find you have the same amount of debt after many years.

Each solution is suited to different situations. Consequently, there is not a one size fits all solution.

 
 

Can I refinance and consolidate my Part 9 Debt Agreement? 

Debt consolidation is available to refinance your part ix debt agreement. However, you need income and sufficient equity in your property to consolidate into your home loan. Therefore, the minimal equity that allowed a debt agreement and to keep your property; could also prevent a consolidation of debt. Therefore, waiting while your property value increases are all that is required.

Consequently, time usually allows property values and equity to grow. Therefore, within a short period, you could have the equity to refinance. 

Paying your debt agreement off; plus an increase in property value, can provide sufficient equity to consolidate debt.

What loan options are available and will refinancing reduce my repayments? 

  • Firstly, debt consolidation by refinancing your home loan. Indeed, there are currently no unsecured loans to payout debt agreements.
  • Secondly, property security is required.
  • Thirdly, lenders offer different interest rates based on the age of the debt agreement.
    • For one-day-old debt agreements, there is usually not enough equity. As the maximum equity debt agreement policy would mean there is insufficient equity at DA establishment. 
    • Although, for debt agreements one to two years old there could certainly be sufficient growth in equity. Indeed, we have refinanced many debt agreements < two years old and have provided excellent repayment benefits.
    • Finally, for part 9 debt agreement greater than two years old; the interest rates are lower and the financial benefit is higher.

It is worth noting:

  • Each lender has a different perspective on debt agreements. As such, some lenders view debt agreements as a bankruptcy. While others see a part 9 debt agreement refinance simply as a debt consolidation similar to a credit card. As such, the different point of view provides differences in interest rates between the available lenders.
  • Keep in mind; all the lenders will look at payment history of your debt agreement. As such, lenders are aware that missed payments can result in cancellation of your debt agreement and potential for bankruptcy.

Can I refinance if I'm in arrears with my part 9 debt agreement?

You are still able to refinance your debt agreement even with an arrears. However, with an increase in lender risk, there is an interest rate increase as well. However, missing a single payment or having a good story does improve the refinance options.

  • Good payment history on your debt agreement is essential. As a missed payment on the debt agreement can result in cancellation. Though, it is unlikely to occur with one missed payment. As such, if a debt agreement is cancelled the only recourse for you is a full bankruptcy.
  • Consequently, lenders' don't like recently missed payments on a debt agreement. As such, each missed payment downgrades your risk profile with a lender, and as a result, increases the interest rate available. Also, multiple missed payments in could result in no finance solutions.

Important: Discuss your options immediately if you are warned that your debt agreement may be cancelled.

  1. Firstly, your debt agreement administrator.
  2. Secondly, a Financial counsellor; see here for information on choosing a financial counsellor.
  3. Finally, discuss your options with an experienced credit advisor who understands debt agreements.

Loan Saver Network welcomes your call to discuss your options on 1300 796 850.

What to expect with a Personal Insolvency Agreement?

There are many debt solutions available to rectify issues with debt. As a result, one of these solutions is a Part 9 debt agreement. Consequently, there are many details to investigate if personal insolvency is the most appropriate debt solution for you. Furthermore, see some essential information related to personal insolvency agreements:

  • Firstly, you will need to make ongoing payments toward the unsecured debts. Plus, a controlling trustee called a Personal Insolvency administrator would facilitate your insolvency.
  • Secondly, your creditors are unable to charge any further interest.
  • Thirdly, the creditors must speak to your insolvency agreement administrator as your representative. As such, removing the pressure of phone calls, you may have been experiencing.
  • Also, via your debt agreement administrator arranges a meeting of creditors. As such, the debt agreement will need to be accepted by your creditors.
  • As such, once approved your administrator will provide a debt agreement proposal.
  • If approved, your debt agreement will incur ongoing repayment amounts: either weekly, fortnightly, or monthly repayments. Also, the registered trustee manages the payments to creditors.
  • Keep in mind; when you enter a debt agreement; credit reporting agencies are notified.
  • Also, a Debt agreement will stay on your credit file for five years. Otherwise, two years after the end date.
  • Finally, entering into a debt agreement may affect your ability to get credit.

What debts can be under a Part 9 Debt Agreement?

In short, any personal unsecured debts can be under a debt agreement. For that matter, secured debts are not able to be included under a debt agreement. Included debts are:

  • Firstly, personal loans, credit cards and store cards.
  • Also, payday loans (typically loans <$2000 to be repaid within one year or less).
  • Plus, overdrawn bank accounts and unsecured overdrafts.
  • Unpaid rent can be included as a creditor to be put under a debt agreement.
  • Medical, accounting and legal fees can be included as well..
  • Also, Phone, internet, gss and electricity bills can also be included in a debt agreement.

Debts that may not be under a debt agreement.

Check with your creditor to confirm if a debt agreement can be used to settle your debts. Therefore, these debts are:

  • Court fines
  • Secondly, child support
  • Thirdly, HECS or HELP Loans
  • Also, Victims of crime
  • Debts incurred by fraud
  • Plus fines, penalties and court-ordered payments.
  • Finally, debts incurred after Australian financial security authority accept your proposal.

Secured loans such as car loans, home loans, and any caveat debt cannot be under a part 9 debt agreement.

Related pages: What debts does a debt agreement cover?

Recorded information on your credit file and the AFSA Bankruptcy database

When you apply for a Part 9 Debt Agreement; it is an act of bankruptcy. Therefore, if your creditors reject your debt agreement, you can apply to the court to make you bankrupt.

  • Part 9 debt agreements and bankruptcy are recorded on your credit files with credit reporting agencies.
  • Also, part ix debt agreements and bankruptcies held with the National Personal Insolvency Index (NPII).
  • Finally, as the credit file is accessed when obtaining credit; your insolvency agreement may prevent you from getting further finance.

Is a Part 9 debt agreement a debt consolidation?

The debt agreement is not a debt consolidation loan. In simple terms, Part 9 refers to a clause under the bankruptcy act. Therefore, if you are under a Part 9 debt agreement it will appear on your credit file under bankruptcy. 

A Personal Insolvency Agreement is a legally binding arrangement between yourself and your creditors. As such, personal insolvency is a formalised agreement with your creditors. Furthermore, it resolves your unsecured debts without you becoming bankrupt.

Keep in mind; a part ix debt agreement is not debt consolidation, a debt consolidation mortgage or a loan. As such, your part 9 debt agreement is a type of bankruptcy registered on the national personal insolvency index (n.p.i.i).

Let's talk about a solution that suits you