Personal Loans with Part 9 Debt Agreement

Find out what your options are when looking for a personal loan with a Part 9 debt agreement on your file with Savvy.

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, updated on October 4th, 2023       

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What is a Part 9 debt agreement?

A Part 9 (or Part IX) debt agreement is a type of arrangement that can be made between you and your creditors in the event that you become unable to complete the repayment of your debts. This works by agreeing to pay a set portion of your outstanding debt to your creditors over a manageable period of time (usually three to five years). Once you’ve completed these payments, you can be released from your debt agreement and your creditors can’t chase up any further money from you for that particular case.

Debt agreements are seen as an alternative to bankruptcy, as they come with several key advantages compared to being declared bankrupt. You won’t have a trustee appointed to look after your finances in the same way that you do when you’re declared bankrupt, to whom you must also ask permission if you wish to travel overseas. Your name also won’t be permanently listed on the National Personal Insolvency Index (NPII), either, which can help you access financing and apply for certain jobs in the future.

However, your debt agreement will be listed on your credit file for a minimum of five years and could potentially be there for an even longer period. This means that even after you’ve successfully repaid your debt agreement, you may struggle to access the financing you need for years afterwards and obtain work in certain industries and professions. Also, your name will still be listed on the NPII, albeit for a period of five years rather than the rest of your life. Overall, a debt agreement is a better option than declaring bankruptcy, but it still comes with a number of distinct and acute drawbacks.

Can I be approved for a personal loan with a Part 9 debt agreement?

Yes – another of the benefits you can experience when entering a debt agreement instead of bankruptcy is that there are still some options when it comes to accessing finance. Bad credit personal loans are offered by a range of flexible lenders across Australia as an option for borrowers with complicated financial histories, with some of these lenders also offering personal loans to those under a Part 9 debt agreement.

These are likely to be highly restrictive in terms of loan amount and term, with small sums of around $5,000 and lengths of one to two years likely to be your borrowing ceiling. However, you’re likely to find that you have more luck applying for financing once you’ve been discharged. Without the restrictions of your agreement’s monthly commitments, more lenders will be willing to loan to you, particularly if you were able to make your payments without any real trouble.

More general bad credit personal finance can enable you to borrow up to a maximum of $10,000 to $12,000 and repay it over one to three years in length. It’s important to note that the selection of lenders you’ll be able to choose from is thinner than what someone with a good to strong credit rating would have, but personal loans are still highly useful when you need fast and simple finance solutions.

How can I work out my affordability?

Determining what you can afford to take on is a large part of the personal loan process, as your lender will always want to ensure that you’re capable of comfortably repaying the amount you’re asking for. Whether or not you’re under a Part 9 at the time of applying, you should take stock of your disposable income to inform how much you’re capable of taking on each month. This can be achieved by subtracting your regular expenses, such as rent, utilities and food, from your monthly income.

Lenders want to see clear daylight between your maximum disposable income and the portion of it dedicated to your loan repayments. For example, if you had $1,000 of disposable income each month, your lender is unlikely to approve you for a loan with terms committing you to more than around $300 each month. Fortunately, you can work out how much different loans cost using our personal loan repayment calculator.

Why find your bad credit personal loan with Savvy?

Top tips for getting personal loan approval with a Part 9

Only apply for what you can afford

The key to a successful application is to apply within your means. If your lender doesn’t have full faith in your loan proposal and believes you’re at risk of defaulting, you’re probably applying for too much. Stick to a loan amount repaid over a length of time that ensures you’re comfortably able to keep up with your commitment.

Don’t apply multiple times at once

Lenders are likely to be put off an applicant with many applications in quick succession appearing on their credit file. This implies to them that you’re less likely to be creditworthy and can result in a denial of funds. It’s worth taking the time and effort to ensure your first application is as strong as can be to minimise the likelihood of rejection.

Avoid any job changes

In addition to ensuring you can afford to comfortably take on the commitment, lenders prioritise borrowers who display job stability. This is because they want to be confident that you’ll be able to consistently make your repayments over the course of your loan term. A casual employee starting a new job won’t have the same security as a long-term full-time worker, for instance. 

Cut down on monthly expenses

There are several ways that you can increase your disposable income to maximise your chances of approval for the amount you need, with one such method being reducing your overall financial commitments where possible. Whether that be a gym membership or subscriptions to costly services, cutting them out of your cycle can help you get approved.

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Still looking for the right personal loan?

Personal loans come in all shapes and sizes, so read more about the ways you can use them, as well as how they might work for you.