Alternatives to Bankruptcy in Australia

Alternatives to Bankruptcy in Australia
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One term you are likely to have heard of under the umbrella of financial difficulties – is Bankruptcy. Whether or not you have any previous experience with this situation – this is a word that may cause a lot of stress and be highly worry-some to think about. Perhaps even this is a path you think your finances are headed for. However, it is important to know that there may be alternatives to filing for Bankruptcy, yet can help you resolve your financial challenges.

While as an end game bankruptcy may seem like the best solution – a quick and easy way of coping with financial hardships. On the other hand, sometimes this option may actually cause more grieve than it can help. While, I have known some people who have filed for Bankruptcy and it had been the right decision for them at the time – it still may be worth examining some other options that can also help you to re-stabilize your current finances. Here are some alternatives to bankruptcy in Australia that may also be suitable for you in your life.


This type of agreement is a legal arrangement that takes place between the debtor and creditor. As an alternative for bankruptcy, known more accurately as a Part IX Debt agreement that is submitted to the AFSA (Australian Financial Security Authority) for review. Upon approval, this document is then submitted to any creditor where an outstanding balance is owed. Important to note about this method of resolving debt issues, is that while it is similar to bankruptcy filing, it is still not officially classified as such.


This second option that can help debtors avoid filing for bankruptcy is a Personal Insolvency Agreement. This method is similar to the first debt agreement plan, however there are not as many limitations, specifically pertaining to the level of income and assets held by a borrower. Additionally, there is also no restriction on the amount that the borrowers owes. In similar fashion with a bankruptcy procedure, a PIA agreement involves a trustee who contacts the creditors on the borrower’s behalf. As a part of this proposal, if the creditor rejects the application, the borrower can petition this decision. If however denied, creditors can then try to enforce a bankruptcy filing.


Lastly, this final method of avoiding bankruptcy comes in the shape of an informal agreement that can be made between the debtor and creditor. This agreement revolves around a plan for how a borrower will repay their debts over a certain timeframe. These types of agreements can be negotiated based on what each borrower is capable of as well as what also will satisfy the creditor. With the help of a financial counsellor, an accountant or even a lawyer, an informal agreement can be drawn up and presented to all creditors. Often times, these plans may include payments that are made in a lump sum at a reduced rate or a plan that involves a longer schedule based on instalment payments.

The major benefit of implementing these types of debt agreements is that while it may still affect your credit history, ultimately it does avoid the larger stigma that is often associated with a bankruptcy filing. If you are interested in looking into any of these options, you will notice that while they are listed under the Bankruptcy Act, they still remain outside of an official bankruptcy procedure.

For more information on these alternatives for bankruptcy, you can review the details provided by the Australian Financial Security Authority at:


Debt Relief Australia is also an organization that you can contact for future assistance in the areas of bankruptcy and alternatives such as Debt Agreements. This site offers a wide range of financial services that can help borrowers combat their debt challenges. Specifically, the site discusses how to avoid bankruptcy through various methods of financial restructuring as well as matches individuals with the suitable debt-reduction/financial plan. This group is reachable online and by phone and offers Australia wide local calling. If you prefer that the a specialist contacts you, you can also request a call back through their online site at any hour or the day or week. Debt Relief Australia maintains Credit License and this assures clients that they are a legitimate debt relief services provider.

Debt Free Australia

This agency offers comparable services and can assist individuals with tricky credit situations manage their debt levels through unique personal financial plans such as debt agreements, which can ultimately help them avoid having to file for bankruptcy.

Through a Registered Debt Agreement Administrator, you can receive help setting up a debt agreement that is appropriate for you and that will be sent along to your creditors for approval. This group won’t charge you any fees until you are fully qualified for the debt agreement, and to confirm whether you meet this criteria, they also perform a free assessment of your financial eligibility.

Overall, while these sites do inform you of your options as opposed to only having to turn to bankruptcy, they also list some of the reasons why debt agreements like these may not be appropriate. It is important to be aware of the consequences of pursing these alternatives and how they can impact your finances in both the short and the long term.

After researching some of these debt-resolution methods, it became apparent to me that many people may not be aware of these of options and instead they may think they have to jump right into a bankruptcy outcome. This realization also serves as a reinforcement for why it is important to contact a financial expert who can advise you on some of these alternatives. In the meantime, you may also come across some other courses of action that can help you manage your debt and improve your financial outlook moving forward.


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