What Are My Personal Debt Solutions?
If you find that your debts are piling up and you are starting to lose sleep over your financial affairs, then it is time to start exploring personal debt solutions.

There is a range of debt options that you may consider, and DFA offers every single one of them.

So what are my personal debt solutions?
Debt Agreement
A Debt Agreement is a formal arrangement that is established between you and your creditors. It is an agreement in which you propose to pay a certain amount in instalments. It usually lasts between 3 to 5 years.

For a Debt Agreement to be successful in its proposition and execution, you need to nominate an amount that you can comfortably pay over the duration of the agreement and that creditors also agree to. One of the major advantages of a Debt Agreement is that you usually pay less than what you owe.

Personal Insolvency Agreement
A Personal Insolvency Agreement is very similar to a Debt Agreement in which you pay a stipulated amount to creditors over a duration of typically 3 to 5 years.

While there are a few differences, one of the main ones is the thresholds you need to meet or fall under to be eligible for a Debt Agreement or Personal Insolvency Agreement.

Bankruptcy
Bankruptcy has more severe consequences than other debt solutions and so is usually considered a last resort for those who are looking for personal debt solutions.

The Bankruptcy period lasts for 3 years and 1 day from when your State of Affairs is lodged and accepted by the Australian Financial Security Authority (AFSA).

It usually has more of an impact on your life compared to a Debt Agreement or Personal Insolvency Agreement. For example, with Bankruptcy, you will need to obtain permission from you Trustee if you wish to travel overseas. In some cases, your Trustee may ask you to surrender your passport. With the agreements, you are free to travel as you wish.

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.

How a Debt Agreement can be an alternative to filing for bankruptcy

The COVID-19 pandemic over the past 2 years has put a lot of strain on many people’s ability to satisfy their financial commitments, leading to bankruptcy and personal insolvency. It doesn’t have to be that way, however since a debt agreement might be a viable alternative to bankruptcy.

Debt agreements are legally enforceable agreements between a debtor and their creditors that give debtors a flexible approach to paying their debts without having to file for bankruptcy. Repayments are made to a debt agreement administrator rather than to the creditor directly, which makes repayments more manageable, especially when numerous creditors are involved. After the agreed-upon payments are made, creditors can’t go after the debtor for any more money.

While a debt agreement isn’t the same as declaring bankruptcy, it can have a negative impact on your credit score. It is necessary to get professional advice. The length of time it takes to pay off a debt arrangement depends on whether you own assets like a house. However, once the agreement is signed, all interest charges from unsecured creditors stop for the duration of the agreement.

Debtors must fulfil certain conditions to be eligible for a debt settlement, including:

• You are insolvent and cannot afford to repay your debts.
• You have not been declared bankrupt or entered into a debt agreement within the last 10 years.
• You meet the limit on how much debt you can have and what kind of debt you can have. Please note that fines do not qualify for a debt settlement.
• You must meet AFSA standards for unsecured debts, assets, and after-tax income for the next 12 months.

If you are looking for advice personally tailored to your situation about Debt Agreements, then please contact Debt Free Australia. DFA 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.