If you have entered into a Part 9, you have admitted that you are insolvent and are unable to maintain debt repayments as they stand. Therefore an agreement is reached with your creditors which hopefully allows you to reduce set repayments in line with your income and affordability, for a set period of time.
While you are in a part 9 debt agreement, taking on more loans is pretty much out of the question, after all how can any lender justify lending you more money if you were unable to meet the repayments on the debts you already had. Their action in offering you a personal loan could be seen as “Irresponsible” by ASIC and other regulators of the finance sector.
So when we receive applications from borrowers looking for a personal loan while in a Part 9 – we assume that they have not been explained what a part 9 is and how it will impact their ability to borrow during and after the debt agreement.
There are lenders out there who will consider lending to undischarged Part 9 applicants or even those in undischarged bankruptcy, however these loans are small and very expensive. They are known as cash or payday loans and can offer you a few hundred dollars for a few weeks.
Consumers who decide to accept these need to be careful not to fall back into the trend of taking on loans that they can not afford.
The one type of loan that can be obtained before being discharged from a part 9 is a home loan. This is of-course on the proviso that as part of the new home loan settlement you will also fully pay out your part 9. The problem for most borrowers with home loans while under part 9 is that they need to have access to a significant deposit as well as funds to pay out the debt agreement before they can qualify.
This problem generally puts a halt to such applications. However there are exceptions. For example where one partner is in a debt agreement and the other has a large deposit, they can combine efforts to repay the debt agreement and make a home purchase.
Even if one of the borrowers has a debt agreement on their credit history, home loan qualification requires a more significant deposit as well as sufficient income to service the loan. In most cases a deposit of at least 20% plus own funds to settle the purchase and that is in addition to whatever funds may be required to pay out the part 9.
It is worth remembering that a part 9 debt agreement is actually referring to part 9 of the Bankruptcy act and as such places significant limitations on a person’s ability to borrow while n this agreement and even after discharge.