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Warning Signs

Be Aware Of The Debt Warning Signs

Do you know the red flags to look out for?

Not everyone who has a debt problem needs professional help, but if you do, waiting until the situation gets out of control is probably the worst thing you can do. Any of the following could indicate that you need advice regarding your debt situation:

  • You only pay the minimum repayments
  • You use credit cards to pay off other debts
  • You are always near your credit limits
  • You are refused credit limit increases
  • You sometimes miss payments because you cannot afford to make them
  • You don’t know exactly how much you owe
  • You lie or a to your friends and family about the amount of debt you have

 

If you have started receiving written demands for payment it is essential that you seek professional advice, for there can be no denying that you have a problem. Creditor demands can escalate very quickly if you do not heed them, and many people have found themselves unable to prevent bankruptcy because they have taken action too late.

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Here are the escalating signs that you need to look out for.

1st step: Your creditors will begin by sending you “soft demands” for payment. These will generally begin with reminders and late payment notices, and will increase in severity as non-payment continues, leading up to internal default notices.

2nd step: Formal Demand. Most creditors have solicitors or debt collectors who act for them in sending out formal demands for payment, and they will require that you either contact the creditor to make a payment arrangement, or pay the full amount owing, within a specified time, usually about one month.

3rd step: Court Judgement. This can lead to bankruptcy (outlined below) or other methods whereby your income or assets are forcibly acquired

4th step: Bankruptcy Notice. If you owe a creditor more than $5,000 and they have obtained a court judgement against you, you can be issued with a Bankruptcy Notice. You will be given 21 days to respond to the Notice, either by paying the judgement debt in full or lodging an objection in Court. If you fail to respond to the Bankruptcy Notice the court will then issue.

5th step: a Creditor’s Petition. This is the last step before you are made bankrupt. The deadline will vary from case to case (i.e. it is dependent on the schedule of the court) but the bankruptcy hearing date will be clearly set out in the petition.

The good news is that any action stemming from a Court Judgement (step 3) or Bankruptcy Notice (step 4) can be stayed by a Debt Agreement or a Personal Insolvency Agreement. This is provided, of course, that you can set one up in time. If you are receiving written notices of demand from your creditors or their representatives, you need to seek immediate advice from a trained Personal Debt Advisor.

Call us at Debt Free on 1800 676 598 if you recognise any of the above warning signs.

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