If you find yourself in overwhelming debt, you may need a little help to manage that debt. One option for you to consider is a debt agreement. Debt agreements are becoming increasingly popular across Australia and they are often a good solution for people on a low income who have few or no assets.
Debt agreement – what is it?
A debt agreement is a negotiated arrangement between you and your creditors which sets out how much of your debts you will pay, to whom and by when.
There are professionals like debt agreement administrators and debt counselors who can help you draw up a debt agreement that is specific to you and your debts.
The debt agreement proposal is lodged with the Insolvency and Trustee Service Australia (ITSA) and ITSA will then contact your creditors to see if they agree to your proposal. The majority of your creditors (being owed at least three quarters of the total debt) must agree to the proposal before it can go ahead.
The benefits of debt agreements
The benefits of a debt agreement include:
- You pay a single regular repayment rather than juggling multiple repayments
- The interest on your debt is frozen
- Your credit report is less affected than by bankruptcy
- A debt agreement administrator will handle negotiation and communication with your creditors
Is a debt agreement right for you?
Debt agreements are available to people with personal debts under $100,664.20 and a net income below $75,498.15.
Your debt agreement can be prepared by a professional – called a debt agreement administrator – who will handle all negotiation and communication with your creditors on your behalf. Debt agreement administrators will generally charge upfront fees though so it is important that your creditors agree to your proposal.
Here are a few more things you should know.
There is no point in entering into a debt agreement unless you are committed to paying off the debt. If you fail to meet the terms of the agreement, your debt problems may get worse.
The debt agreement proposal and the debt agreement will be listed on national registers that are publicly available. A debt agreement will be listed on your credit record for a seven-year period and during that time it may be difficult to obtain credit.
Debt agreements provide an excellent alternative to bankruptcy especially for low-income earners in a state of financial difficulty. It is important that before you enter into bankruptcy you explore every alternative available to you. A debt agreement administrator will be able to answer any questions that you have and provide you with greater detail, based on your own personal situation.
If you think that a debt agreement will be the right solution for you, or simply need to talk to someone about your options, then call Debt Agreement Solutions on 1300 653 962. Let Debt Agreement Solutions help you get your life back on track.
