Paying off your debts is one of the best options you can make to improve your financial situation. However, it is also one of the biggest financial issues most people struggle with. Paying your debts sometimes may not be easy – especially if you make mistakes along the way. Below are the top 3 mistakes that you should make sure to avoid:

1. Not having a pay off plan and a debt free date.
When you start paying off your debts it is important to have a clear strategy in mind. Setting clear goals and having a specific plan can help you stay motivated and track progress.

It is important to firstly assess your current financial situation, your current needs and wants. Based on this you should ask yourself these questions:

• Which debts do you want to pay off first?
• Which debts do you want to pay off earlier?
• How much money did you want to allocate to paying off your debts?
• What is the total amount of money you owe?

2. Not having an emergency fund.
When you are faced with debt, you may feel inclined to forgo having an emergency fund. Whilst this can be very tempting, it is important to always have an emergency fund in case unexpected expenses arise. Emergency funds should only be used for true emergencies such as an unexpected medical expense or car repair.

3. Missing payments.
Making your debt repayments should be one of your top priorities. It is important to make your debts repayments as early as possible each month, even if it isn’t due until the end of the month. This can prevent you from forgetting to make your payment or if unexpected expenses pop up. Missed payments might not only result in penalty fees but also lower your credit score which can make it harder to secure loans in the future.

If you are looking for advice personally tailored to your situation about any debt relief solutions, then please contact Debt Free Australia. Debt Free Australia are passionate about helping Australians get out of debt and prepare for a better financial future. Please contact us on our 24/7 toll-free hotline on 1800 676 598 to speak to one of our friendly and professional debt relief consultants.

What Is A Personal Insolvency Agreement?

A Personal Insolvency Agreement (PIA) is a legally binding payment arrangement you can reach with your creditors if you can no longer afford to repay the full debt. Also known as a Part 10, a PIA can be a flexible way to get relief from your debts without being made bankrupt.

You qualify for a personal insolvency agreement if you meet the following criteria:

You are considered insolvent (unable to pay your debts as and when they fall due); and
Have unsecured debts more than > $1,19,119
Have equity in assets more than > $2,38,238 or
Regularly employed & annual income is more than > $99,958.95 (after tax) or approximately >$139,436 (before tax for Australian residents)

The process of setting up a personal insolvency agreement includes firstly, appointing a Controlling Trustee. You can do this by signing a 188 Authority. Once the 188 Authority is executed, this means your assets become subject to the control of your Controlling Trustee, who will then investigate your financial affairs and prepare a report to make an offer to your creditors.

Typically, a Controlling Trustee will recommend a Personal Insolvency Agreement proposal if it provides your creditors with a better outcome compared to if you went bankrupt. In most cases you can settle your debts for less than what is owed and the balance will be legally written off.

A personal insolvency agreement is one of the two agreement options available. Another option that may be available to you is a debt agreement. To see a comparison between a personal insolvency agreement and a debt agreement, please click here.

If you are exploring your personal debt solutions and would like to speak to a professional to learn more about them, then please contact 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.

Here at Debt Free Australia we always try to find the least severe financial solution before we consider bankruptcy. With that philosophy in mind, we offer a free financial assessment to explore possible alternatives before committing to Bankruptcy. Whilst filing for bankruptcy is a quick and easy way to get out of debt, it may have adverse consequences, please click here for more information. With this in mind, here are some simple tips you can use to help avoid bankruptcy:

• Cutting down expenses
  Putting together a budget is the easiest way to work out and organise your spending habits. Freezing your credit cards is the first step to curb your spending. If you cannot sustain your current lifestyle, consider downsizing, prioritising your necessities and reducing your discretionary spending.

• Selling some of your assets
  Take action immediately by sell what you can spare to pay your debts, such as furniture, jewelry, and electronics.

• Negotiate with creditors
  You should contact your creditors as soon as once you realise potential issues with meeting payment obligations. In some cases, creditors may agree to lower interest rates, reduce fees, or change payment terms.

• Prioritise your debts
  Create a plan to prioritise your debt repayments. Budget to pay for absolute necessities such as food, housing, and transport. Next would be paying off debts with the highest interest rates and so on.

  We understand that every situation is different and provide advice personally tailored to your situation about any debt relief solutions. Debt Free Australia is passionate about helping Australians get out of debt and prepare for a better financial future. Please contact us on our 24/7 toll-free hotline on 1800 676 598 to speak to one of our friendly and professional debt relief consultants.