Life should be fun and exciting, but if you’re thinking about arranging a debt agreement, you’re probably not enjoying life to its fullest.
Creditors and debt collectors can be relentless, and this just adds to the stress that you're already feeling when you're missing loan repayments.
When your credit cards are maxed out, no one will lend you another cent.
If you don’t pay up, you could lose your car or your home. You could lose everything.
If you’re looking for ways to relieve financial stress, a debt agreement may be an appropriate course of action. Arranging a debt agreement isn’t a casual action though, and it’s not taken lightly by financial authorities.
Because of this, it’s important to have a firm understanding of the terms below.
Personal insolvency is a legal term that describes your financial position. If you’re unable to pay debts when they’re due, you’re insolvent.
Arranging a debt agreement or declaring bankruptcy is an act of insolvency.
A formal debt agreement is a legally binding arrangement. It lets you pay your creditors a sum you can afford.
A debt agreement is also referred to as a Part 9 or Part IX debt agreement. It falls under Bankruptcy Act 1966.
To declare yourself bankrupt is to declare to your creditors that you are no longer able to afford the repayments that you owe them.
Successfully filing for bankruptcy releases you from most of your debts.
It’s not always overspending or poor money management that leads to a state of insolvency. Sometimes in life, we get unlucky. Some things are just out of our hands. There’s no need to feel embarrassed or ashamed about your financial state.
People fall into financial hardship for a wide range of reasons that can impact all Australians, including:
Injury or Illness
Being injured or become severely ill and as a result unable to earn an ongoing wage or salary
Losing your job unexpectedly and being unable to get another job in time to meet your commitments
Loss of Income
Suddenly losing a significant portion of your income due to a change to your income source
Going through a relationship breakdown can affect our finances significantly
For some, entering into a debt agreement is an effective strategy for debt relief.
If your creditors accept your proposal:
No further interest will be incurred on the debts included in your debt agreement
Repayments are fixed at a certain amount for a set time period, usually up to five years
During this set period, you’re protected from debt collectors and any legal actions from creditors who are party to the agreement
Before you push forward with arranging a debt agreement, you need to understand the consequences:
And you don’t get a pass on all types of debt. You still need to pay back what you owe
Your access to financial products will be severely restricted, and you won't have easy access to credit
Your name will be listed on the National Personal Insolvency Index (NPII) for at least five years
Attempts at arranging debt agreements can fail if your creditors reject your debt agreement proposal. If this happens, they can use your action to force your bankruptcy.
Some of the results of being forced into bankruptcy may include:
Creditors selling your belongings to get their money back
Creditors taking control of a portion of your salary
Being blocked from access to credit products
Being barred from working in certain professions
If you are, it’s understandable. In some cases, a formal debt agreement can increase your financial stress.
The truth is, you may not need a debt agreement at all. Each and every person’s financial situation is unique.
Our primary goal is to relieve your financial stress by developing financial solutions that work just for you.
All you need to do is meet with us. A consultation session with us is completely free of charge. In our session, we’ll help you to develop an accurate understanding of your financial situation, and a clear plan to improve it by thoroughly analysing yours bills, your living expenses and the debts you have incurred.
In many cases, we can create a financial plan to bypass a formal debt agreement entirely.
Negotiate a break or hiatus in your payments
Apply for a mortgage or personal loan variation
Arrange your debt over a longer time at a more affordable rate
Get debt collectors off your back so you can start enjoying life again
Depending on your financial situation, arranging a debt agreement may be unavoidable.
If we’ve gone through a complete analysis of your financials and come to this conclusion, we can help you arrange a formal debt agreement.
In fact, we can handle everything to make your life less stressful than it already is, if you like.
You’ll be able to:
We help you arrange the debt agreement and keep you on track through the process
A debt agreement isn’t the end. The road may get tough, but it leads to a new beginning
Stressing less means you can sleep more peacefully at night, and start thinking about the future
In Australia, personal insolvency is overseen by the federal government through the Australian Financial Security Authority (AFSA).
The AFSA registers all debt agreements and bankruptcies.