There are many things to take into account before you make a final commitment to enter into a debt agreement.
It is important to get professional help and advice.
A debt agreement administrator will provide advice specific to your circumstances, give you advice on the best solution for you and help you make the necessary arrangements.
If you decide that a debt agreement is right for you, the next step is to lodge a proposal with Australian Financial Security Authority (AFSA). You will be charged a fee to lodge the proposal.
Your debt agreement administrator will help you lodge the proposal, advise you on the amount of the associated fee and how to pay it.
The proposal will come in three parts:
- A debt agreement proposal
- An explanatory statement
- A statement of affairs.
AFSA will then send the proposal and explanatory statement to your creditors and ask them to vote on the proposal.
Your creditors will assess your proposal and vote. If your creditors have any questions, the debt agreement administrator will answer them on your behalf.
For a proposal to be accepted, the majority of your creditors must vote yes. Once a proposal is accepted your debt agreement administrator will be responsible to collect the agreed money (or dividends) from you and pay it to your creditors. The administrator will also keep creditors informed and tell AFSA when the agreement is completed.
Important information to note:
- a secured creditor is also entitled to vote and receive dividends on any unsecured part of the debt. Alternatively a secured creditor may elect to not receive dividends and rely on the security provided on the debt. In other words secured creditors’ rights in relation to dealing with their security are not affected by a debt agreement.
- If the debt agreement is accepted, while you are not bankrupt, you are committing an act of bankruptcy. Your name will appear on a National Personal Insolvency Index and may also appear on a credit reporting agency record for up to seven years. This may affect your ability to obtain further credit.
- Even if the proposal is not accepted, your name will remain on the National Personal Insolvency Index and on the records of credit reference agencies and creditors will be able to commence debt recovery action.
Contact us to learn more details about the benefits and consequences of a debt agreement and if it’s the right option for you? Call Debt Agreement Solutions on 1300 653 962.