Debt agreements are a formal alternative to bankruptcy under bankruptcy law for people who are insolvent (unable to pay their debts when they are due). Under a debt agreement, your unsecured creditors agree to accept less than the total amount of debt owed, in return for a commitment on your part, to make regular repayments for an agreed period. As of June 27, 2019, debt agreements are limited to a maximum of 3 years or 5 years if you own or pay for your home. Warning: Always consult a financial advisor before going bankrupt, as there are serious consequences that you need to understand, including the possibility that any money or property you receive (e.g.B. inherit or earn) while you are bankrupt, will be taken to pay your debts. A financial advisor can also help you negotiate an informal agreement and avoid bankruptcy or a debt agreement! If a debt deal doesn`t seem like the right option for you, there are alternative debt solutions, such as debt management, which are described below: you might be tempted to strike debt deals to reduce your interest or simplify your repayments, but you can actually honor your repayments without any real harshness. A debt agreement isn`t really appropriate, as it will affect your ability to get loans and other services in the future. Maybe you can refinance yourself at a lower interest rate and/or consolidate your debt to make things easier. You may have options to increase your income or reduce your expenses. See Money Smart at www.moneysmart.gov.au options A debt agreement is for people with lower incomes who can`t pay what they owe. But there are consequences.
You`ll make your monthly repayments to your debt contract manager instead of paying the individual creditors, and once you`ve made the payment and the agreement ends, your unsecured creditors won`t be able to try to get back the rest of the money originally owed. A debt agreement is a great solution to the endless stress and worry about aggressive debt and creditor. We are specialists in this field and have helped thousands of Australians reduce their debt and stress. The debt burden is immense and can weigh on families and relationships. Repayments can become a vicious circle and sometimes you only repay the interest on the debt, which means the debt never stops. In these situations, a lasting solution is needed, which realistically matches your situation. You should get some information about entering into a debt agreement and your alternatives if you are first going to a debt contract manager or other party that offers access to debt agreements. This must be at least 5 days before the conclusion of the debt agreement and, in our experience, it can take many months before a debt agreement is actually proposed. They must also be informed in writing at least one day before the conclusion of the debt contract. This communication should contain details of your specific agreements, including the fees you will pay, and some general information about debt agreements and alternatives. You can obtain information about debt agreements at any time directly from the Australian Financial Security Authority at www.afsa.gov.au.
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