Debt Agreement Advantages and Disadvantages
Bankruptcy is not the only way out!
A Debt Agreement can be a realistic alternative to bankruptcy and can help you become debt free relatively quickly.
A Debt Agreement is a legally binding agreement between someone who is in debt and the creditors who are owed the money.
We can help you draw up legal Debt Agreement proposals. The arrangements need to be affordable for the benefit of all those concerned.
The advantages of a Debt Agreement are:
- All interest and charges on your unsecured debts will be frozen.
- Providing you keep to the terms of your arrangement, your creditors will not be able to pursue any further court action. They will also be prohibited from sending letters to you and telephoning you for the purpose of debt collection.
- Once the Debt Agreement is successfully completed your debts are effectively settled, providing you with a fresh start.
- For anyone who does not wish go bankrupt because of their job or the stigma of bankruptcy this can be an excellent option.
- The Debt Agreement will bind most unsecured creditors.
- Your contributions are based on your ability to pay.
- You can keep your secured assets as long as you continue to pay for them
- Once there is an agreement in place, the amounts owed to creditors does not change
- A debt agreement can be constructed to suit the debtor. For instance, it may be possible to propose a moratorium, lump sum settlement or any other arrangement that creditors may consider suitable.
The disadvantages of a Debt Agreement are:
- You will be required to stick to a budget for the term of the agreement.
- It’s a requirement that all assets and liabilities are declared
- Debt Agreements are recorded on a public register and are likely to appear on your credit file. This in turn may effect you ability to obtain credit
Commonly asked questions about the difference between a debt agreement and going bankrupt
Questions |
Debt
|
Bankruptcy |
|
Will I automatically lose my car? |
No, as long as the payments are maintained |
Maybe, if its worth more than $6850.00 |
|
Will I lose my furniture? |
No |
Maybe, you are allowed to keep necessary household furniture. |
|
Will I lose my tools of trade? |
No |
Maybe, if you have over $3400.00 worth. |
|
If a family member dies and leaves me some money, will I be able to keep it? |
Yes |
Any interest you have or acquire during bankruptcy as a beneficiary of a deceased estate belongs to the trustee. |
|
Will I be able to travel overseas? |
Yes |
Maybe, If you wish to travel overseas you must obtain the permission of the court if you are required to make compulsory. |
|
Will I lose my house? |
No, as long as the payments are maintained |
Maybe, The trustee has to deal with any equity or interest you have in a property, for the benefit of your creditors. This may mean that the property has to be sold. |
|
Do I have to appear in court? |
No |
Maybe, Your trustee will decide whether there are matters requiring examination before the Official Receiver or the Court. If, for example, investigations into your affairs are needed you may be required to attend an examination or an interview. |
Debt Fix provide Debt Consolidaton, Informal Debt Arrangements, Formal Debt Arrangements and Debt Agreements to those in Sydney experiencing financial difficulties.
Debt Help Tips and Articles
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