This is one of the biggest advantages of entering into a Debt Agreement compared to bankruptcy. If you have a house with equity in it and you also have unsecured debt which you can no longer afford to repay, a Debt Agreement will be ideal as it will protect your house from your unsecured creditors. It will also allow you to settle your unsecured debts for less than what you currently owe.

Providing that you continue to comply with the terms of your Debt Agreement, your unsecured creditors will be unable to take any debt recovery action against you which could result in you losing your house. In other words, if you weren’t subject to the protection of a Debt Agreement, then your unsecured creditors could petition the court for your bankruptcy. Under bankruptcy, your Trustee would most likely take steps to sell your house if you have equity in it.

So the answer to this question is yes, you will be able to keep your house if you enter into a Debt Agreement on the strict proviso that you:

• fully disclose the details of your house in your Debt Agreement Proposal; and
• you fully comply with all of your obligations under the Debt Agreement; and
• you keep your mortgage repayments up to date.

If you are fail to keep both your mortgage repayments and your debt agreement repayments up to date, you will be at risk of losing your house either through a mortgagee repossession or bankruptcy.

You can see entering into a Debt Agreement has clear advantages compared to bankruptcy. As we said above your Trustee can sell your house if you are made bankrupt. Even if there isn’t any equity in the property at the start of the bankruptcy, the Trustee has six years after you get discharged from bankruptcy to sell your house (Sec 129AA(3) of the Bankruptcy Act). However, it is important to be aware that this time period can be extended out indefinitely if the Trustee issue a notice under Sec 129AA(5) of the Bankruptcy Act.

So if you have house which you wish to keep and you also have unsecured debts which you need to settle, it is best that you protect the equity in your house by entering into a Debt Agreement.

If you want more advice on a Debt Agreement and how your house could be saved with a Debt Agreement call our friendly and professional debt consultants on 1800 653 485.