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Debt agreements better path than bankruptcy



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THE HON NICOLA ROXON MP Attorney-General Minister for Emergency Management

MEDIA RELEASE

10 January 2012

DEBT AGREEMENTS BETTER PATH THAN BANKRUPTCY

Australians facing bankruptcy are increasingly turning to debt agreements to provide better outcomes for their financial circumstances, Attorney-General Nicola Roxon said today.

“Debt agreements give many Australians in financial distress an alternative option to get back on their feet sooner than bankruptcy,” Ms Roxon said.

“Thanks to reforms to the Bankruptcy Act in 2007, thousands of Australians have taken up debt agreements and potentially saved their homes.

“Debt agreements in many cases can be the smarter way forward especially as bankruptcy can leave a financial legacy that can affect people for years.”

Ms Roxon said a new free hotline was now available for advice and support.

“I encourage Australians in financial difficulties to ring the Government-funded free financial counselling experts on 1800 007 007 to review their debt management,” Ms Roxon said.

New figures provided by Insolvency and Trustee Service Australia (ITSA) show that bankruptcies declined 20% between 1 January 2007 and 31 December 2012, with 150,353 bankruptcies recorded during this period. During the same period, there were 49,034 new debt agreements made, which represents a 68% increase.

Debt agreements are principally aimed at consumer debtors. Australians facing possible bankruptcy benefit from debt agreements which provide:

 The protections of bankruptcy, such as staying enforcement action against provable debts and relief from harassment  A release from debts that would be provable in a bankruptcy if the debtor satisfies all the obligations under the debt agreement;  A debtor not needing to have to all creditors agree to a debt agreement

proposal, unlike an informal agreement to settle debts; and  The possibility of keeping their house.

Further information about the amendments is available on the Department’s website www.ag.gov.au and financial counsellors are available to review their debt management options by calling 1800 007 007

Further information about these new statistics are available from ITSA: http://www.itsa.gov.au/dir228/itsaweb.nsf/docindex/Statistics+&+Research-%3EStatistics

For all media enquiries, please contact the Attorney-General’s Office on 02 6277 7300 or 0409 945 476