An Evaluation of Debt Agreements in Australia

Monash University Law Review, Vol. 44, No. 1, pp. 151-197, 2018

47 Pages Posted: 15 Sep 2017 Last revised: 17 Dec 2018

See all articles by Vivien Chen

Vivien Chen

Monash University - Department of Business Law & Taxation

Lucinda O'Brien

Melbourne Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Date Written: September 13, 2017

Abstract

In the 20 years since their introduction, debt agreements have become the fastest growing form of personal insolvency in Australia, comprising 41.5 per cent of all personal insolvencies in 2016. Debt agreements were introduced to provide debtors respite from financial stress through arrangements with creditors and to provide a viable alternative to bankruptcy. Law reformers posited that their low cost, and the avoidance of some of the consequences of bankruptcy, were among their key benefits. The article draws on three sources of empirical data to evaluate the debt agreement system and its impact on Australian debtors: statistics published by the Australian Financial Security Authority, a survey of individuals who entered into debt agreements or declared bankruptcy between 2010 and 2015, and interviews with a range of industry stakeholders. The article considers the extent to which debt agreements are achieving their objectives and examines concerns that debt agreements may be causing harm, particularly to vulnerable debtors on low incomes. The authors propose a series of reforms to enhance the efficiency of debt agreements.

Keywords: personal insolvency, debt agreement, bankruptcy

Suggested Citation

Chen, Vivien and O'Brien, Lucinda and Ramsay, Ian, An Evaluation of Debt Agreements in Australia (September 13, 2017). Monash University Law Review, Vol. 44, No. 1, pp. 151-197, 2018. Available at SSRN: https://ssrn.com/abstract=3036315

Vivien Chen (Contact Author)

Monash University - Department of Business Law & Taxation ( email )

Caulfield Campus
Sir John Monash Drive
Caulfield East, Victoria 3084
Australia

Lucinda O'Brien

Melbourne Law School ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

Ian Ramsay

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

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