Megan and Creagh
2 years
Debt agreements
Looking to make a debt agreement?
Need to negotiate with creditors and people you owe money to?
We can help.
When you’re on the edge...
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.
Understanding insolvency and debt agreements
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.
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Personal Insolvency
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. -
Formal debt agreement
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. -
Bankruptcy
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.
Your situation may be more common than you expect
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:
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Injury or Illness
Being injured or become severely ill and as a result unable to earn an ongoing wage or salary
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Unemployment
Losing your job unexpectedly and being unable to get another job in time to meet your commitments
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Loss of Income
Suddenly losing a significant portion of your income due to a change to your income source
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Relationship Issues
Going through a relationship breakdown can affect our finances significantly
The upside of debt agreements
For some, entering into a debt agreement is an effective strategy for debt relief.
If your creditors accept your proposal:
You won’t need to pay more interest
No further interest will be incurred on the debts included in your debt agreement
Your repayments become fixed
Repayments are fixed at a certain amount for a set time period, usually up to five years
You’re protected
During this set period, you’re protected from debt collectors and any legal actions from creditors who are party to the agreement
The downside of debt agreements
Before you push forward with arranging a debt agreement, you need to understand the consequences:
You’re not released from your debts
And you don’t get a pass on all types of debt. You still need to pay back what you owe
Your credit options become limited
Your access to financial products will be severely restricted, and you won't have easy access to credit
You are registered as insolvent
Your name will be listed on the National Personal Insolvency Index (NPII) for at least five years
The risk associated with debt agreements
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:
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Creditors selling your belongings to get their money back
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Creditors taking control of a portion of your salary
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Being blocked from access to credit products
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Being barred from working in certain professions
Having second thoughts about arranging a debt agreement?
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.
As part of this plan, we can:
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Negotiate a break or hiatus in your payments
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Apply for a mortgage or personal loan variation
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Arrange your debt over a longer time at a more affordable rate
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Get debt collectors off your back so you can start enjoying life again
What if I really do need a debt agreement?
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:
Stress less about debt
We help you arrange the debt agreement and keep you on track through the process
Look to a brighter future
A debt agreement isn’t the end. The road may get tough, but it leads to a new beginning
Sleep better and plan ahead
Stressing less means you can sleep more peacefully at night, and start thinking about the future
Frequently asked question
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.
Megan and Creagh didn't get into money trouble because of big, lavish expenses, but just the day to day living. After coming to MyBudget with a debt of 91K, they've paid off 5 credit cards and are now saving for a house!