2 Debt Agreement Myths Explained
By Administrator 08 June, 2018
A Debt Agreement is a legally binding agreement that can be arranged between a person with unmanageable debts with their creditors if the person can no longer afford to repay their debts. Essentially, it is an arrangement a person makes with their creditors to pay an agreed amount over a period of time, usually ranging from 3 to 5 years. In most cases, debts can be settled for less than what is owed and the balance will be legally written off (subject to creditor acceptance).
A debt agreement is a flexible alternative to bankruptcy that provides relief when individuals are struggling with unmanageable debt. Debt Free Australia has a track record in helping Australians successfully settling their unaffordable debts through a debt agreement. However, many people still believe certain misconceptions about this legal arrangement.
Here are 2 popular myths and why they are not true.
- Debt agreements destroy credit ratings forever
As of March 2014, changes to the Privacy Act limited the length of time information can be recorded on a credit file. Correct at the date of this publication, your name and other details will be listed on your credit file for 5 years from the date of the agreement or 2 years after the end date, depending on whichever date is later.
- Debt agreements are only for financial failures
There is a misconception that individuals who enter into debt agreements are financial failures. However, many people who incur debt problems may have been affected by incidents out of their control, including unexpected medical bills, death of a family member, natural disasters, etc. Debt agreements give people an opportunity to make a sensible choice, rather than allowing their already deteriorating financial situation spiral out of control.
Financial problems can strike anyone, anytime.
A debt agreement is one of the various solutions offered here at Debt Free Australia. If you are exploring your personal debt solutions and would like to speak to a professional to learn more about them, then please contact our friendly debt advisors at DFA. We offer a FREE initial consultation so that you can get unbiased, expert advice on which one is right for you. Our toll-free hotline operates 24/7 so you can call us at your own convenience on 1800 676 598.