The Debt Agreement Option

A Debt Agreement Could Be The Best Option For You

A Debt Agreement gives you the opportunity to compromise the amount you owe your creditors, freeze interest and fees, and for the compromised amount to be paid off over three years or five years if you are buying your home.

If you are stressed and cannot see a way out from the financial pressures you are experiencing, it is important for you to know that you do have options and will be able to get past the financial distress you are experiencing.

options

It may be that you just need your bank to give you a loan repayment holiday under their hardship provisions, for you to be able to regroup and get going again. You may need a Financial Counsellor to give you some help with your budgeting for you to get control of your finances. If you have tried these sorts of things and have not been able to get back on your feet, then a Debt Agreement may be a good option for you.

For a Debt Agreement to work, you will need a reliable income that is sufficient for you to be able to live and make the required Debt Agreement payments. It is so important that you have sufficient money to be able to pay your living costs and your Debt Agreement payments. If this is not the case, please talk to us 1300 764 197 and we will talk about other options you should consider instead of a Debt Agreement.

 

Are You Eligible for a Debt Agreement?

Considering Eligibility? Considering Eligibility?

We should also mention that there are restrictions on who can apply for a Debt Agreement, so let\’s check that before going too much further:

  • You must be struggling to pay your bills when they are due.
  • You must not have been in a Debt Agreement, Personal Insolvency Agreement or Bankrupt in the last 10 years.
  • Your liabilities must not exceed $121,030
  • Your property must not exceed $242,060.
  • Your after-tax income must not exceed $90,772.50

A couple of comments regarding these limits. If your liabilities exceed $121,030 there are alternative options to Debt Agreements available for the resolution of your financial problems. If this is your situation, give us a call 1300 764 197 and we will run through them with you. To calculate the value of your property to check whether it exceeds $242,060, only your divisible property is included in this calculation. Divisible property is those assets that are not protected for you in bankruptcy. If you need a hand to work this amount out, give us a call 1300 764 197. Regarding your income, it is important to note that the relevant amount is your after-tax income. Statutory Super paid by your employer is not included in this amount.

If you qualify and can afford a Debt Agreement, it can be a good way for you to get back on your feet and put the financial pressure behind you. Whilst your Debt Agreement is in place your creditors cannot undertake debt collection against you or make an application to the Court for you to be made bankrupt. You can focus on getting on with life while your Debt Agreement Administrator deals with your creditors.

 

How A Debt Agreement Works

What is a debt agreement? Normally you will pay an amount per fortnight or month to a Trust Account and your Debt Agreement Administrator will most likely pay your creditors on a Pari-Passu basis every three months.

Company Direction and Trustee of Super Fund

super Unlike bankruptcy, you can continue being a company director and Trustee of your Self-Managed Super Fund (SMSF).

Saving Your Home

Saving Your HomeIf you are swamped by debt and are concerned about the possibility of losing your home, give us a call on 1300 764 197 to discuss your situation. Depending on the amount of your unsecured debt (eg: credit card and personal loans) and the equity in your home, it may be possible to utilise a Debt Agreement to save your house. We have years of experience in helping people save their homes and specialise in Debt Agreements to help people save their homes.

Business Debt

If you have operated a business and owe money to former employees for wages and the ATO for taxes and superannuation, it is possible to resolve these debts with a Debt Agreement.

Joint Debt

If you have joint loans and enter into a Debt Agreement whilst the other borrower does not, the other borrower will remain liable for the joint debt. If, however, both joint borrowers propose and enter into separate Debt Agreements in a co-ordinated way, the joint debt will be caught by the Debt Agreements.

Dealing with difficult creditors

If you have a difficult creditor who you feel is working against you, a Debt Agreement can enable you to marshal that creditor with all your creditors into a Debt Agreement. When you propose a Debt Agreement, your proposal is circularised to creditors for them to vote for or against. Of the creditors that vote, if greater than 50% in value agree to your proposal, then all creditors including those that did not vote and those that voted against your proposal will be encapsulated into your Debt Agreement. Once you have a Debt Agreement, the creditors cannot chase you for money, undertake debt recovery action or commence a Court application for you to be made bankrupt.

Protect your Mental Health

If you are experiencingmental health mental health issues, a debt agreement should be carefully considered and may not be your best option. If entering a payment arrangement will cause your financial pressure to continue and your mental health to deteriorate then we need important that you do not enter into a Debt Agreement you cannot afford.

TIP: It is so to find an alternative solution for the financial pressure you are experiencing. If this is your situation, give us a call1300 764 197 for a chat.

Before deciding that a Debt Agreement is the right way for you to go, it is important that you first consider all your options. We are not here to talk you into or out of a Debt Agreement. We are here to help you find the best available solution for the financial pressure you are experiencing.

 

Will A Debt Agreement Solution Work?

When considering whether or not to enter into a Debt Agreement, it is important for individuals in Australia to understand their options and seek advice from an experienced financial counsellor who can assess their individual situation and advise them of the best possible way forward. If a Debt Agreement will work for you without continuing your financial hardship, you will be able to avoid bankruptcy, get past your financial difficulties, and on with life.

For more information on Debt Agreements, we recommend our article Pros and Cons of a Debt Agreement.

If you would like to discuss your circumstances or have questions, please give us a call on 1300 097 926 or email hello@understandingbankruptcy.com.au

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