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How is a Personal Insolvency Agreement Better than Declaring Bankruptcy?

By Administrator 28 October, 2014

When your finances are running low and your stress levels are higher than ever before, it can be difficult to know which is the best path to take. Individuals often fail to understand the options available for them to achieve better outcomes, such as a Personal Insolvency Agreement, and so they may file for bankruptcy prematurely.

A Personal Insolvency Agreement is a legal alternative to bankruptcy, involving the establishment of a formal agreement between a debtor and their creditors. With the objective of the agreement being to achieve the best outcomes for both parties, a settlement may be reached in which the debtor will pay an amount that may be less than what is owed, but more than what would be paid if they were to go bankrupt.

A significant advantage of a Personal Insolvency Agreement is that it does not involve the disposal of your assets, such as your home, whereas this may occur is one went bankrupt. Furthermore, a Personal Insolvency Agreement, unlike bankruptcy, will allow you to continue to travel overseas while insolvency procedures are still being performed, which is an advantage for those whose jobs require them to travel.

Another thing to consider is that, whilst both a Personal Insolvency Agreement and bankruptcy will place a mark on your credit file (for a period of five and seven years respectively), the restrictions of sourcing finance after having completed a Personal Insolvency Agreement will not be as strict as they would be with a bankruptcy record on one’s file.

Therefore, when facing financial difficulties, individuals should first consider the option of a Personal Insolvency Agreement. This option allows them to  repay a portion of their debts and so avoid many of the harsh restrictions associated with bankruptcy.

To know if a Personal Insolvency Agreement is right for you, consult with a fully licensed expert who can properly assist you and provide a solution. At Debt Free Australia we can help you with any type of insolvency service, every step of the way, and will carefully explain the differences between your available options to help you make a more informed decision about your financial future. We also offer a free debt assessment.

For impartial and obligation-free advice, or to find out more about the services available at Debt Free Australia, contact 1800 676 598.