Filing for bankruptcy should always be considered as the last resort if you are overwhelmed with unsecured debt. Before making a potentially life changing decision, we will carefully go through all of your options to see if you can avoid bankruptcy.  The options we will explore include:

•  Negotiating an informal arrangement with your unsecured creditors;
• entering into a formal Debt Agreement (Part IX) or;
• entering into a formal Personal Insolvency Agreement (Part X).

Informal Arrangements
An informal debt arrangement can be negotiated directly between you and your creditors to manage your unsecured debt. These arrangements might include, for example, a suspension of repayments for a period of time, or agreed regular installments.
The only drawback to this arrangement is that the agreement is not legally binding on your creditors, which means they can change their mind if you do not keep up with your promised repayments.  Typically this can then lead to creditors adopting a more aggressive approach which may include bankruptcy proceedings.
Informal arrangements can be negotiated with or without the assistance of an Insolvency Practitioner.
 
Part IX Debt Agreement
A Debt Agreement is a legally binding arrangement negotiated between you and your creditors usually with the assistance of a Debt Agreement Administrator. This arrangement will often take the form of an agreed sum paid in installments (usually over three to five years). The interest on your debts will be frozen at the time you lodge your proposal with AFSA.
Entering into a formal debt agreement means that you will be protected from any creditors who may have threatened bankruptcy proceedings.
You need to be aware of the consequences of proposing or entering into a Debt Agreement and these are explained in our related article.
Click here to read more.
Part X Personal Insolvency Agreement
If your debt exceeds the Debt Agreement Thresholds but you wish to deal with your debt by way of a formal agreement with your creditors, you may wish to enter into a Personal Insolvency Agreement (PIA).
A PIA works in much the same way as a Debt Agreement, ie it must first be approved by your creditors. The key difference is that entering into a PIA requires you to appoint a Controlling Trustee to take control of your assets and report your proposal to creditors and hold a meeting of your creditors. For this reason, a PIA usually costs more than a Debt Agreement.
If you want to explore your options on how to legally avoid bankruptcy, then call us today on 1800 462 767 for free and impartial advice.

Who should I appoint as my Administrator?
Whilst you can submit a Debt Agreement Proposal yourself, most people choose to appoint a Registered Debt Agreement Administrator. We strongly recommend that you only deal with a Registered Debt Agreement Administrator who has a sound reputation and experience in the industry. Furthermore, it is advisable that you deal with an administrator who is qualified in all areas of personal insolvency. That way you won’t be dealing with someone who is only registered and qualified to offer you a Debt Agreement. If you deal with a Registered Trustee in Bankruptcy, they are licenced to offer you any personal insolvency service.  In other words a Registered Trustee will not be biased towards only offering one service to you.
Here at Debt Free we have a fully qualified and licenced Registered Trustee in Bankruptcy, who is licenced to offer you any personal insolvency service including a Debt Agreement, Personal Insolvency Agreement or Bankruptcy. Our unique debt assessment processes will ensure that you are offered the right debt solution.
Before you decide who to appoint as your administrator, make sure you do your own research and ask the following questions:

• How long have you been registered with AFSA?
• How long have you been operating in the industry?
• What personal qualifications do you hold?
• Who will be responsible for handling and supervising my case?
• What other services are you licenced to provide?

 
What fees are charged and when do I start paying?
All Registered Debt Agreement Administrators will charge fees. The critical issue to understand is how much are those fees and when will you be asked to start paying them.
The fees charged by Debt Agreement Administrators will be split into two (2) categories.  These categories are:

• Set-up fees
• Administration fees.

 
Set up fees
Most administrators charge a set-up fee.  A set-up fee is to remunerate the Debt Agreement Administrator for helping you prepare the Debt Agreement Proposal and lodging it with the Debt Agreement Service at AFSA. The set-up fee may become payable before your administrator submits the proposal to AFSA for processing. Most Debt Agreement Administrators will charge a set-up fee and will most likely ask that the majority of it be paid before the Debt Agreement Proposal is lodged with AFSA for processing.
The key issue here is that you should not pay any money towards the set-up fee until the administrator has completed a thorough debt assessment. This is critical because unless a thorough debt assessment has been completed you will not know if you are eligible for a Debt Agreement or whether you can afford a Debt Agreement.
Here at Debt Free Australia we do not start charging any set-up fee until we have completed a thorough debt assessment. Once we have done that, we will know how much you can afford to pay into your Debt Agreement each week or month and only then we will ask you to start paying that amount towards your set-up fee.  In other words, we will not charge you any money until we are satisfied that we can offer you a Debt Agreement and you are eligible.
We have seen some companies charge a set-up fee for the client to later find out that they were not even eligible for a Debt Agreement.
 
Administration fees
Debt Agreement Administrators will also charge an administration fee. This fee is to supervise the agreement and to pay creditors on your behalf. The administration fee is charged as a percentage of the contributions that you make under the Debt Agreement and can only be drawn from the contributions you make once it has been accepted by your creditors.
If you would like some advice on selecting a Debt Agreement Administrator call the team at Debt Free Australia.  Our team is fully trained and can advise you on your best options.  Call us today on 1800 462 767.

A transaction to defeat creditors is exactly as it sounds; it is a transaction that a person enters into in order to defeat their creditors. But how can you “defeat” your creditors?

 If you were to suddenly find yourself unable to pay your debts (i.e. you were insolvent) and you declared yourself Bankrupt, your creditors would receive a proportionate and fair share of the sale proceeds of any assets you own that have a reasonable amount of equity in them. If you know that you are unable to pay your debts, though, and you decide to sell or transfer any of your assets so that they will not be sold when you declare Bankruptcy, you are trying to defeat your creditors.

 A transaction to defeat creditors is such because of the intention behind it. When you declare yourself Bankrupt, your Bankruptcy Trustee must perform investigations into your financial affairs. They will check to see if you have transferred any assets into anyone elses name in the past, perhaps that of a family member or spouse, or sold anything for a lot less than what it was worth. If you have done so, they must then determine if you were insolvent at the time, that is, that you were unable to pay your debts as and when they fell due. If you were, it could be determined that you transferred or sold those assets with the intention of keeping them from your creditors in the future. It is possible that the transaction could be reversed, and the asset sold at its proper value so that the sale funds can be evenly distributed to your creditors.

 If you are considering the effects and rules of Bankruptcy, you should consult the advice of a professional before taking action. Your past actions can have an effect on the way that your Bankruptcy is administered, and in addition, there may be other options available to you so that you can avoid Bankruptcy and the possibility of any such transactions being reversed.  To avoid bankruptcy you may wish to consider a Debt Agreement or a Personal Insolvency Agreement (depending on criteria).

 Our highly experienced advisors have a background in all aspects of personal insolvency, and will be able to give you advice that is tailored to your unique financial situation. Call us today on 1800 462 767.

Many people who are struggling with finances do not even know that help is available, let alone where to look. There are actually numerous resources available for people who need help with their finances, and the most appropriate would depend on what sort of assistance you need. If your concerns are to do with, say, business finances, investments, or retirement planning, you would be looking for the services of a financial planner or advisor. Most often, though, people in need of financial assistance are struggling with personal debts and bills.
One of the first places you can look for financial counselling is within community organisations such as Anglicare and the Salvation Army (to name some of the more well-known). A list of various organisations that can be contacted in each state and territory can be found here on the Australian Financial Security Authority’s (AFSA) website. These services are usually free of charge and designed for those who cannot afford to pay, and can range from help organising simple household budgets to third party negotiations with your creditors for repayment/hardship arrangements.
There are also professional budgeting services available for those who have the income available to pay their bills, but simply need some help with planning and making their payments. A simple google search using the term “budgeting service” will yield a number of companies that may be able to help in this regard.
AFSA themselves are also a good resource for advice and information, although being primarily concerned with aspects of insolvency, you may find that they are of more use when you yourself are insolvent. They can be contacted on 1300 364 785 for general information about such arrangements as Debt Agreements, Personal Insolvency Agreements, and Bankruptcy.
If you are looking for advice and assistance with any type of financial dilemma, call one of our consultants on 1800 462 767. Here at Debt Free Australia we are committed to helping indebted Australians find a solution to their financial difficulties. Our highly trained staff will be able to help you to determine what sort of assistance you need and, if it is not something that we can help you with ourselves, who would be the best organisation to refer you to. Call us today on 1800 462 767 for free and impartial financial relief advice.

A Debt Agreement  is a formal debt relief solution that is available to insolvent Australians who meet certain eligibility criteria. For many people who are struggling with unmanageable debt it is an ideal way to settle their unsecured debts and protect themselves from harsh collection activity such as bankruptcy. Whether or not you are able to propose a Debt Agreement is dependent upon certain factors.

The first requirement is that you are genuinely struggling to pay your debts, ie. that you are insolvent . This simply means that you are unable to your debts and bills as they fall due, and without resorting to using your credit facilities. If you are unsure if you are insolvent or not, a reputable Debt Agreement Administrator should be able to tell you after completing a thorough debt assessment. At Debt Free Australia we offer a free debt assessment.

The second requirement is that your income, unsecured debt level, and the value of any available equity in your assets, all fall below a certain threshold. The threshold amounts are updated every six months or so and can be found here. If you exceed any of these thresholds you are not eligible for a Debt Agreement, but you would be able to look at a Personal Insolvency Agreement instead. But if you fall under all of them, you have the option of doing either (though it would make more sense for you to do a Debt Agreement).

The third requirement is more practical than legal, and that is that you quite simply are able to afford the repayments. Again, this is where a Debt Agreement Administrator is able to help you. A reputable Administrator will draw up an indepth household budget for you and ensure that your Debt Agreement repayments are affordable and sustainable, as well as being acceptable to your creditors.

If you are wondering whether a Debt Agreement is the right solution for your unmanageable debt, call one of our consultants today on today on 1800 462 767. We can help you to determine your eligibility for a Debt Agreement and advise you on all of its pros and cons so that you can make an informed decision.

A Debt Agreement is an ideal solution for many people who are struggling to pay unmanageable debt. It is not without negative consequences though; because it results in the banks missing out on some of the repayments and interest that they are entitled to, there has to be a downside to it to help keep the system fair. But there are also many positive consequences of entering into a Debt Agreement, and these should be weighed against the negatives before deciding to go ahead so that you feel confident in your decision.

The main negative consequence of entering into a Debt Agreement is that it places a default on your credit file for a period of 7 years. There is also a permanent record placed on the National Personal Insolvency Index, but this is rarely accessed because you must pay a fee to do so, so most people are generally only concerned with the credit file default. Practically speaking, this means that you would not be gaining any new credit for a while – certainly, whilst you are under the Agreement, you would not be applying for more credit (and in some circumstances it is actually an offence to do so), and after you come out of it there will be a period of maybe 2-4 years where any credit applications would be subject to closer scrutiny by the banks. Note that this can also impact on applications for new phone plans, utility connections, and the like, and that if you are a Sole Trader or in a Partnership it might affect the way that you run your business.

Don’t forget though, that it was credit that got you into this situation in the first place. Not being able to get more for a while is seen by many people as a good thing! As are some of the more positive consequences of entering into a Debt Agreement, such as legal protection from recovery action; reduced payments; frozen interest; and a foreseeable end to your unsecured debt. In many cases, the upsides to a Debt Agreement are enough to outweigh the downs, and a credit file default looked upon as a small price to pay.

If you are considering entering into a Debt Agreement, call our professional debt advisors so you can get fully informed of all consequences, both good and bad, before making your decision. Our debt consultants have years of experience in setting up and maintaining Debt Agreements and will be able to advise you on all aspects of the process, allowing you to make a fully informed and comfortable choice. Call us today on 1800 462 767.

An “Act of Bankruptcy” is an act which a person commits which a creditor can then reply upon to approach the Court for a bankruptcy order to be issued.
There are many types of situations where someone can commit an “Act of Bankruptcy” but the most common types relied upon by creditors in bankruptcy applications are:

1. Failing to comply with a Bankruptcy Notice;
2. Leaving Australia with the intent to defeat or delay your creditors;
3. Keeping house with the intent to defeat or delay your creditors;
4. Departing your usual house or place of business with the intent to defeat or delay your creditors;
5. Sending your creditors a notice that you intent to suspend or have suspended payment;
6. Signing a proposal for a debt agreement;
7. Signing a 188 authority to initiate a personal insolvency agreement.

If you commit an Act of Bankruptcy, a creditor who is owed $5,000 or more can petition the Court to make you bankrupt.
If you are concerned about committing an Act of Bankruptcy, call the bankruptcy experts at Debt Free Australia on 1800 462 767. Our bankruptcy consultants have years of experience and will be able to give you accurate and impartial advice on all aspects of bankruptcy and options to avoid bankruptcy.

A “preferential payment” is a payment that you make to a creditor that is in preference to your other creditors, meaning that you have given them substantially more than you have given the others. If you manage to pay all of your debts, a payment like this should not matter, however, if you were to go Bankrupt, though, or enter into a formal arrangement with your creditors known as a Personal Insolvency Agreement, any preferential payments would need to be investigated by your Trustee.

When you fill out the paperwork to declare yourself Bankrupt, you are asked to disclose if you have paid any creditor an amount more than $1,000 over and above your normal repayments, or surrendered any assets to them. Your Trustee in Bankruptcy must then review the last six months worth of bank statements for all bank accounts that you hold. From these they will be able to see if you have made any large payments to any creditors. They will then determine whether you were insolvent at the time, and if so, whether the creditor that received the large payment got more than they would have had you gone bankrupt and your available funds were spread out evenly amongst everyone. If so, the Trustee may then seek a court order to have that transaction reversed and the money would be distributed fairly to all creditors.

If you were to lodge a Personal Insolvency Agreement proposal your appointed Controlling Trustee would not “claw back” any of those payments like they would in a Bankruptcy. They do have to know about them though, because it is their job to recommend your offer to your creditors. To do this they need to determine what would happen if you were to declare Bankruptcy and compare this with your offer under the Personal Insolvency Agreement. The Controlling Trustee then sends a detailed report out to your creditors showing them that they would get more of their money back if they accepted your offer instead of making you go Bankrupt.

If you have any creditors demanding that you pay them more than your regular repayments, call our debt advice line on 1800 462 767. We can explain the terminology to you and give you advice on your options to deal with your unmanageable debt.

In our years of giving indebted Australians advice on their financial difficulties, we have learned that no person’s situation is quite the same as another. Not only is one’s debt level relative to every other aspect of their life, but there are different types of debt that people struggle with, and each come with their own solutions and restraints.

The most common type of debt that people struggle with is unsecured, meaning that there is nothing attached to the account that could be sold if you do not make the payments. Most credit cards, store cards and personal loans are unsecured. Unsecured debts also tend to have higher interest rates and, in the case of cards, are more likely to creep up on you because of how easy they are to keep using.

Many people also call us when they are having trouble paying their secured debts, such as a car loan or home mortgage. The main problem with these types of loans is that they are hard to negotiate with, as the secured creditor has the right to repossess the asset if you do not make your payments. Other problem debts such as fines and child support can be even harder to deal with, as they simply must be paid – not even Bankruptcy can wipe them out.

Depending on what sort of debt you have, it may be possible to become completely or relatively debt free by entering into a Debt Agreement. A Debt Agreement is a legally binding payment arrangement that encompasses all of your unsecured debts. It freezes the interest on those debts and reduces the amount that you pay toward them, and when you complete the Agreement (usually within a period of 3-5 years) you will be legally released from them. There are consequences to entering into a Debt Agreement, and you should discuss these with a reputable Debt Agreement Administrator before making the decision to go ahead with one.

If your debt is all unsecured and you successfully complete a Debt Agreement, you will come out of it “debt free”. If, however, you have any debts that are not covered by a Debt Agreement, such as secured loans and fines, you will not be completely debt free at the end, as these still need to be paid. You may find, though, that putting your unsecured debts into an affordable arrangement will make it easier for you to manage these other debts.

For more information on how to become free of unsecured debt, call one of our consultants today on 1800 462 767. We are fully licensed and qualified to administer a Debt Agreement for you, or, if you are not eligible for one, any of the other insolvency options that are available that will wipe out your unsecured debt. Our advice is impartial and obligation-free, so call us now.

When you purchase a car under finance it is not, technically speaking, yours – not until you pay out the loan completely. So if you want to sell the vehicle and it is still under finance, you need to get the finance company’s permission to do so first. The buyer of the vehicle should also run a check with the Personal Property Securities Register (PPSR) to ensure that it is not financially encumbered.
But what if you have sold the vehicle without the finance company knowing and it is still under finance? Obviously, all proceeds of the sale should be put toward the loan, as to do otherwise would be considered extremely fraudulent behavior. Any amount that you still owe the finance company would become payable and, technically speaking, unsecured. You should note, though, that if you did not get permission to proceed with the sale, the finance company may not automatically give up their claim on the vehicle. If they have not officially released the security on the vehicle they have the right to track the vehicle down and seize it from the new owner, causing them to lose their money. But because you are no longer in possession of the security (ie. the car), your debt with them would now be classed as unsecured.
If you find yourself with a shortfall amount on a vehicle that you have sold and are unable to pay it, you may be able to manage it with a Debt Agreement or Personal Insolvency Agreement. These agreements are government legislated repayment arrangements for unsecured debts, and they allow you to repay your creditors what you can comfortably afford whilst protecting you from further recovery action from them.
For more information on different types of debt and your options for managing it, call us here at Debt Free Australia on 1800 462 767. Our consultants have years of experience in all aspects of personal insolvency and will be able to give you accurate and impartial advice on your obligations and any debt relief solutions available to you.