The Consumer Action Legal Centre has called on the government to take a more holistic approach in its review of bankruptcy law, and consider changes to the Part IX debt agreement provisions of the Bankruptcy Act.CALC argues in a submission to Treasury that many debtors make a poor choice or are ill-advised when they enter a debt agreement. It wants more consumer safeguards built into the process, including a higher bankruptcy threshold, better provision of information to debtors and a presumption that a debtor would be ineligible for a debt agreement if their assets could not be lost to creditors under bankruptcy.The government issued a consultation paper last month, saying it wanted to shift the balance in bankruptcy law from a focus on protecting creditors to one where there is a balance between encouraging entrepreneurship and protecting creditors.It proposes to reduce the default bankruptcy period from three years to one year and to include safe harbour arrangements for directors that would protect them from personal liability for insolvent trading in certain circumstances.CALC said the bankruptcy threshold (the level of debt that allows a creditor to bankrupt a debtor) should be raised from A$5000 to $20,000. It said trustee fees and legal fees can add tens of thousands of dollars to the initial debt."The current threshold gives creditors the power to force the sale of a family home to recover what began as a reasonably small debt," the CALC submission said.It called for the provision of impartial information to debtors who are exploring insolvency options. It cited a pilot scheme conducted by the Federal Circuit Court in collaboration with CALC, which was evaluated by the University of Melbourne Law School. The evaluation found that several debtors were given sufficient information to allow them to demonstrate solvency and avoid bankruptcy. Others were able to make better-informed choices about whether to go into bankruptcy or enter into a debt agreement.CALC's biggest concern is with debt agreements, which it said were often inappropriate for people going into them.The debt agreement process usually involves some of the debt being written off and repayment of the remainder over a term of three to four years. A debtor with significant assets will lose those assets under bankruptcy but can retain them with a debt agreement."A debt agreement is only a superior option for debtors who have an asset to protect," CALC said."Bankruptcy is a better choice for debtors who have very low incomes and no divisible assets because it clears all unsecured debt without requiring any repayments."For many people the fees imposed by debt administrators negate any reduced amount paid out to creditors."CALC cited research showing that 75 per cent of people entering debt agreements have less than $5000 of divisible assets."We believe people are entering debt agreements, even when it is not in their interests, because there are considerable incentives for debt agreement administrators to promote them," it said.Many debtors have complained that they were misled about the impact of a debt agreement on their credit