A formal alternative to bankruptcy for eligible directors.
A Part 9 Debt Agreement is a binding arrangement under the Bankruptcy Act 1966 that lets you settle unsecured debts on terms you can actually afford — without going bankrupt. For directors whose debt has become personal, it can be a far better outcome.
What it is
A binding compromise — without bankruptcy.
A Part 9 Debt Agreement (formally, a Debt Agreement under Part IX of the Bankruptcy Act 1966) is a formal arrangement between you and your creditors. You propose terms — usually paying a portion of your debts over a fixed period — and once a majority of creditors by value accept, the agreement binds all unsecured creditors, including the ATO.
Unlike bankruptcy, you keep more of your assets and the impact on your future credit is generally less severe. Unlike an informal arrangement, it’s legally binding and stops creditors taking enforcement action against you.
Who it’s for
Is this the right pathway for you?
- Directors who can afford to pay something — but not everything — toward their personal debts
- Individuals whose unsecured debts are below the legislated threshold
- Directors who want a formal alternative to bankruptcy that protects more of their assets
- Those whose income is below the prescribed threshold
- Directors who have not previously been bankrupt or entered a debt agreement
Key facts
At a glance.
Strict thresholds
Income, asset and debt thresholds are set by AFSA and reviewed periodically — current limits should be confirmed before any application.
Typical term
Most Part 9 agreements run 3–5 years.
Impact on credit
An accepted debt agreement appears on the National Personal Insolvency Index and on credit files for the duration of the agreement plus a further period.
Cannot be a director
You cannot act as a director of a company while a debt agreement is in force without consent.
How it works
The process, step by step.
STEP 01
Eligibility check
We confirm you meet the income, asset, and debt thresholds set out in the Bankruptcy Act.
STEP 02
Draft the proposal
We work with you to design a proposal your creditors are likely to accept and that you can realistically afford.
STEP 03
Lodge with AFSA
The proposal is lodged with the Australian Financial Security Authority and circulated to creditors for a vote.
STEP 04
Implementation
If accepted, the agreement binds all unsecured creditors — including the ATO — and you make payments through an administrator over the agreed term.
Important. A Part 9 Debt Agreement is an act of bankruptcy and has long-term credit consequences. The eligibility thresholds are also restrictive — many directors with significant ATO exposure exceed them, in which case a Part X Personal Insolvency Agreement or other pathway will be more appropriate. We assess this carefully before any recommendation.
Common questions
What people ask most often.
How is a Part 9 different from bankruptcy?
In a Part 9, you propose terms and creditors vote — you’re negotiating, not surrendering control. You keep more of your assets, and the credit impact is generally less severe. However, you must meet strict eligibility thresholds, and it is still an act of bankruptcy with long-term consequences. Bankruptcy by contrast applies regardless of debt size and involves the surrender of divisible property to a trustee.
Can the ATO be included in a Part 9?
Yes. ATO debts are unsecured debts and can be compromised in a Part 9 alongside other unsecured creditors. The ATO often votes on these proposals and will accept them where the return to the Commonwealth is reasonable.
What if my debts are too high for a Part 9?
Then we’d typically look at a Part X Personal Insolvency Agreement instead — it operates on similar principles but has no debt threshold, making it suitable for directors with higher exposures. We assess both at the first meeting.
How long does a Part 9 stay on my record?
An accepted debt agreement is recorded on the National Personal Insolvency Index permanently. It appears on your credit file for the duration of the agreement, and for a further period after completion.
Can I get out of a Part 9 once it starts?
Variations are possible if your circumstances change, but they require creditor consent. If you fail to comply, the agreement can be terminated and you’re back where you started — with a damaged credit file. Going in, we make sure the proposal is realistic from day one.