A Debt Agreement Proposal is essentially a settlement offer for your unsecured debts, which must be accepted by your creditors in order for it to come into effect. Your offer is drawn up and presented to your creditors by a Debt Agreement Administrator, who will then be responsible for maintaining the agreement until you have completed it. When the time comes for your proposal to be decided on, there is a vote by your creditors, and for it to be accepted you need creditors holding at least 50% of the value of your debt to agree to it.
Because of this voting requirement, acceptance of your Debt Agreement Proposal can never be guaranteed. Some creditors have a minimum percentage return that they will accept, while others may be concerned with the length of the agreement, and very occasionally there are extenuating circumstances such as fraudulent behaviour which have an impact on a creditor’s vote.
When a Debt Agreement Proposal is lodged with ITSA they charge a fee of $200. The first consequence of lodging a proposal that is not accepted is that you will be out of pocket for that amount. Secondly, it is lodging the Debt Agreement Proposal that places a mark on your credit file, not just the acceptance of it, because it is an act of bankruptcy to lodge a Debt Agreement Proposal. The good thing about a Debt Agreement is that you can keep trying if it is not accepted the first time. For each attempt at a new proposal, however, you will be facing another charge of $200, and if you decide not to try again you will have a mark on your credit file for nothing.
Here at Debt Free Australia we have been administering Debt Agreements since 2006, so we have a very good idea by now of what will be acceptable to your creditors. And we understand that you would not be talking to us in the first place if you could spare a multitude of $200 lodgement fees. That is why we begin with a rigorous assessment process to ensure that we understand every aspect of your financial situation, before recommending a Debt Agreement Proposal that we feel confident will be accepted by your creditors first go. And unlike many other companies out there, we do not ask for any fees of our own until you ask us to go ahead and start preparing the proposal for lodgement. Again we won’t take you down that path until we have thoroughly assessed your case and feel confident that your creditors will accept it.
It is not the end of the world if your Debt Agreement is not accepted, but it is a stressful experience that costs you time and money. To give yourself the best chance of having your Debt Agreement Proposal accepted by your creditors, call Debt Free Australia on 1800 676 598 and ask one of our friendly consultants about a financial assessment.