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Providing the right advice for a debt agreement

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Merrilyn Mansfield 6 minute read

Let me start by saying I am not advocating that debt agreements are bad for everyone. What I am saying is that some companies who also sell credit repair – and I’m sure some that do not – are giving bad advice about debt agreements because they make good money out of these agreements. Not good form for consumers.

I had a potential client ring me this week and tell me that they had two unpaid default listings on their credit file – one with Vodafone ($600 outstanding) and one with Rent to Own ($650 outstanding). He also had in place a payment arrangement with another credit provider that he could afford that was not yet recorded on his credit file. The payment arrangement was 24 monthly payments of $364. His goal was to keep paying off the payment arrangement and not have it listed with Veda, pay the other two debts (one which he said was ridiculously unfair), and get his credit history cleared so he could go onto a mortgage that his partner currently had.

That’s the scenario he put to another credit repair company and the advice that he got stumped me. He was advised to enter a debt agreement for these three debts totalling less than $10,000 and take a hit on his credit file for the next five years (because that is how long a bankruptcy arrangement – which is what a Part 9 debt agreement is – stays on your credit file).

At this point in this sorry saga, I want to give you some facts and figures and consequences of entering a debt agreement:


1. Debt agreements are only for unsecured debts.
2. The maximum amount of unsecured debt you can put into a debt agreement is $107,307.20.
3. As debt agreements are a form of bankruptcy, you are put on the National Personal Insolvency Index (NPII) – for life. Anyone can access this information – it is publically available.
4. As soon as you enter a debt agreement, it will appear on your credit file and remain there for at least five years, and in some cases longer. All ability to get low-cost finance will cease during this time.
5. One of the many consequences listed on the Australian Financial Security Authority (AFSA) website is that “Secured creditors may seize and sell any assets [for example, a house] which the debtor has offered as security for credit if the debtor is in default.” This is because they are alerted to your change in status.

Now, this client who contacted me did not sound like a young man, so by the time this dropped off his credit file, age may be a factor in achieving a loan approval.

This was my advice to him:

We can work to remove the two adverse listings on your credit file. As part of that, we can negotiate on the two debt amounts. If an error was made in listing you, the credit provider will often reduce the debt, and in 83 per cent of cases we work on, we find errors in the process. We can also set up any payment plans you need.

In addition, we can negotiate in relation to the third debt that is not yet on your credit file. We can see if we can get a better arrangement for you.


None of this work will negatively impact your credit file or ability to get low-cost finance. In fact, our work will potentially improve it and allow you to be approved to go on the mortgage with your partner.

Now that’s what I call a good solution.

Dr Merrilyn Mansfield, lead adjudicator and researcher, Princeville Credit Advocates

Merrilyn MansfieldDr Merrilyn Mansfield is a consumer advocate and the lead adjudicator and researcher for Princeville Credit Advocates, a Sydney- and London-based credit repair company. She is fascinated with consumer laws that relate to credit reporting and in advocating for a  consumer’s right to a correct credit report. For more information, please visit www.wemend.com.au or  email This email address is being protected from spambots. You need JavaScript enabled to view it..

Providing the right advice for a debt agreement
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