What are the pros and cons of a Part 9 debt agreement?

Is a Part IX Debt Agreement right for you?
May 20, 2020
What debts can be included under a Debt Agreement?
May 20, 2020

Debt Agreement Pro’s

  • Certainly, debt agreements are an alternative to full bankruptcy.
  • Above all, interest on your unsecured debts are frozen. As a matter of fact, only the principal plus establishment fees are paid.
  • In addition, your creditors cannot pursue you legally for recovery of the money owed.
  • Above all, you can apply for multiple household debt agreements to reduce the overall household debt.
  • Finally, if you have property equity within the equity threshold, you can retain your property.

Debt Agreement Cons

  • Firstly, they will affect your ability to get credit.
  • Above all, secured assets are not included under a debt agreement. Therefore you are still obligated to make those payments. As such, if you cannot make the payments, the lender can repossess your assets.
  • However, if you run a business, you need to inform your clients that you are under a part 9 debt agreement.
  • Keep in mind; some employment industries restrict employment for people under debt agreements.
  • Finally, if you are unable to keep the payments on a Part IX debt agreement, you may be made bankrupt. Since simply applying for a debt agreement is an act of bankruptcy. As such, your creditors can apply to make you bankrupt.