The Role and Use of Debt Agreements in Australian Personal Insolvency Law

Abstract

The authors report the results of an empirical study of the use of debt agreements in Australian personal insolvency law. Debt agreements were introduced into Australian personal insolvency law in 1996 as an alternative to bankruptcy. This alternative has become increasingly popular, and in 2010 debt agreements represented 23% of all new personal insolvencies. We consider the role and use of debt agreements in Australian personal insolvency law. This includes examination of the various stages of the debt agreement process and the key differences between the characteristics of debt agreement debtors and bankrupts. We also explore issues concerning the current regime, including the role of creditors and debt agreement administrators; the high termination and low completion rates of debt agreements; and whether debt agreements serve as a viable alternative to bankruptcy.