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I’ve been told that I have to go bankrupt because I have too much debt

By Administrator 11 August, 2014

Here at Debt Free Australia we hear countless stories from people just like yourself who are struggling with debt and can see no way out of it. Over time we have noticed that more and more people are being told the following: “You have too much debt for us to be able to help you, so you need to go bankrupt”.

There can be only two reasons why someone would be given that advice, the first of them being simply that: you have too much debt relative to your income to be able to make a settlement offer which your creditors are likely to accept. There is another reason, however, which is far less honest.

There are many companies operating in Australia that can offer you a Debt Agreement to settle your unsecured debts. A Debt Agreement is a legally binding payment arrangement in which you pay your creditors a percentage of the debt that you can afford, and they accept this percentage in full and final settlement. You can only do a Debt Agreement, if your debt level (and/or your income) is below a certain set limit. If your debt (and/or your income) exceeds this set limit and the company you are speaking to can only offer you a Debt Agreement, then yes, they are unable to help you.

What some places might not tell you, though, is that there is a similar arrangement available for people whose debt (and/or income) go over the set limit. It is known as a Personal Insolvency Agreement and, because of the higher amounts that are being dealt with, it must be administered by a Registered Trustee. The companies that are able to offer you a Personal Insolvency Agreement as an option are fewer in number because of this requirement.

We have heard numerous instances of people who were eligible to propose a Personal Insolvency Agreement to settle their debts but were instead told that they need to go bankrupt. And the likely reason that they were told this is because they got their advice from someone who was not willing to send them elsewhere. Luckily, these people continued searching, and have since been spared the stress of full blown bankruptcy. How many people have taken this unfortunate advice though, we cannot even guess.

To give yourself the best chance of receiving accurate and impartial advice, you should ensure that you are speaking to a reputable company that is able to offer you the full range of formal debt relief solutions. This way you can be sure that you will not be misinformed purely so that your business can be retained. The CEO of Debt Free Pty Ltd is both a Registered Debt Agreement Administrator and a Registered Trustee, which means that no matter what your situation is, we will be able to help you with an appropriate solution. Call us today on 1800 676 598 to receive impartial and obligation-free advice from one of our friendly consultants.