Debt reduction services usually take the form of an informal or formal arrangement with your creditors. To understand the differences between informal or formal arrangements with creditors click here or read below.

Informal Arrangements

If you have multiple creditors and are struggling to keep up with all of the repayments you may wish to consider an informal arrangement with your creditors. Click here to learn how you can negotiate an informal arrangement with your creditors.

Formal Arrangements

If you have been struggling with unsecured debt for some time then a formal arrangement with your creditors may be more appropriate.
There are different types of formal arrangements and the appropriate one for you will depend on your circumstances.  The relevant factors which need to be considered are:

• Your unsecured debt levels;
• Your income after tax; and
• Your assets.

If you elect for a formal arrangement, we strongly advise that you carefully select the service provider. Here at Debt Free, we are:

• Fully licensed to handle all types of formal creditor arrangements including Debt Agreements, Personal Insolvency Agreements and Bankruptcy.
• Fully insured (we have professional indemnity whereas many other debt agencies are not insured at all as it is not a legal requirement).
• Privately owned and operated by a Chartered Accountant who is also a member of the peak professional insolvency body in Australia Insolvency Practitioners’ Association of Australia.

If you need advice on debt reduction services call us today on 1800 462 767.

Are you getting stressed by constant creditor demands? 
Don’t ignore the warning signs – those demands can quickly escalate to court action. If left unattended this will result in your bankruptcy…That’s how serious it can get.
Stress from debt can affect your health. If you are concerned take our 2 minute debt stress test. Please consult your doctor if you are concerned that stress is causing health issues.
So, how do you get debt relief? Is there even such a thing? The short answer is yes!
However, choosing the appropriate debt relief service can be time consuming and confusing. To make it easier for you, we have prepared a detailed comparison of the available services.  If you want to discuss the differences you can call us any time between 9am and 5pm weekdays on 1800 462 767.
Once you have chosen the best debt relief solution to suit your circumstances you will then need to appoint a company that you can trust.  Debt Free has been specialising in debt relief services since 2006 and have helped hundreds of Australians get out of debt. Take a minute to read why you should choose Debt Free.
We are dedicated to help Australians find the right solution.
Don’t get overwhelmed and don’t delay, pick up the phone and speak to our friendly professional debt advisers. Call our toll free advice line on 1800 462 767 or fill in the form to the right hand side of the screen, and we will get back to you.
It’s that easy!

If you have recently applied for a debt consolidation loan but were refused, there may be several reasons for this:

• firstly, you have a poor credit record or payment history?
• secondly, you don’t have any assets which could be pledged to secure the  loan?

If you were refused on the basis of having a poor credit record or poor payment history and you have several debts which need to be managed, then you have 2 options to consider. We will help you better understand these 2 options:

• informal creditor arrangement; or a
• formal creditors arrangement.

Informal Arrangement

An informal arrangement can be advantageous if you only have 2 or 3 creditors.  If you have more than 3 creditors, getting all of them to agree can be problematic. Click here to view our tips when trying to negotiate an informal arrangement with your creditors.

Formal Arrangement

A formal arrangement is most appropriate for people who can’t repay their debts (i.e they are insolvent).

If you are insolvent you basically have three options:

1. Debt Agreement;
2. Personal Insolvency Agreement
3. Bankruptcy

What are the differences between informal –v- formal creditor arrangements?

Understanding the differences between informal and formal creditor arrangements is critical. Most people can set up informal arrangements themselves, whereas formal creditor arrangements are usually set up by a licenced insolvency practitioner. To better understand the differences between informal –v- formal creditor arrangements please view our comparison table by clicking here.
You can get more information about your options, by calling our friendly personal debt advisors  on 1800 462 767.

Many people ask the same question – will I be prevented from getting a home loan in the future if I enter into a Debt Agreement or a Personal Insolvency Agreement?
The answer is: not necessarily.
It will of course depend on your financial circumstances at the time and the lender as each lender will assess your application differently using their criteria, but in our experience our clients have been able to get loans after successfully completing their agreements.
A few things to be aware of before entering into a Debt Agreement or a Personal Insolvency Agreement:

• Both of these agreements will show up on your credit file for seven years from when you first entered into them. Whilst the agreement is still on foot you won’t be able to get new credit.

• Once you have completed your agreement it will be updated as such on your credit file. This notation will remain in place until the full 7 year period has lapsed. So if you complete your agreement after 3 years, it will stay on your credit file for another 4 years.

• After the seven-year period has lapsed your credit file should be fully restored. This means all defaults previously listed on your file will be wiped (assuming you haven’t defaulted again since entering into the agreement).

You will find that entering into a Debt Agreement or a Personal Insolvency Agreement offers more flexibility compared to formal bankruptcy, compare the differences by clicking here.
To get more information about these agreements call our friendly personal debt advisors on 1800 462 767.

What debts can put your home at risk?
Do you have a credit card, personal loan or store credit which exceeds $5,000? If you do and you fall behind in your payments or stop making payments, any individual creditor owed $5,000 or more can petition for your bankruptcy.
How does bankruptcy affect your home?
If you are made bankrupt and you own a home, you stand to lose it.  Your Bankruptcy Trustee will make an assessment on the value of your home and will establish what equity is in it.  Depending on how much equity is in it, your Trustee may seek to sell it immediately. If there is little or no equity in it, then the Trustee will most likely lodge a caveat over the property and review the situation every year.  What most people won’t realise is that the Trustee has six years after you have been discharged from bankruptcy (i.e. 9 years after you first became bankrupt) to realise the equity in the property and this period can be extended by the Trustee by simply writing to you before this period expires.
How can you save your home?
If you have become bankrupt and you own a home you should take immediate steps to encourage a family member or your spouse to make an offer to your Trustee.  Even if the Trustee doesn’t intend to take immediate steps to sell the property (due to insufficient equity), it is best to make a commercial offer to your Trustee to resolve the matter early on in your bankruptcy.  If the situation is left unattended and the equity builds up (as house prices increase) the Trustee will then obviously seek to realise the increased value.
If you have unpaid debts and they are over $5,000 don’t ignore the problem and put your house at risk.  Call our bankruptcy consultants on 1800 462 767.

The key to having a good credit record is to pay your bills on time. However, not everyone lives in a perfect world and it isn’t always possible to pay your bills on time. In fact we find that many people sink into debt over a period of time and don’t realise the significance of the problem until they can’t meet the minimum payments due on their debts each month. If you find yourself in this situation, then you are probably insolvent and you should seek professional assistance now.
If you are insolvent, you would be wise to consider a formal arrangement with your creditors. A formal arrangement with your creditors will be recorded on your credit file for 7 years, however, the government has recently introduced new laws which will become effective in 2014, which will force the credit reporting agencies to remove the listing from your credit file when you successfully complete your agreement. The average formal arrangement only lasts for between 3 to 5 years, so if all goes well your credit file could be clean within 3 to 5 years. More importantly you will become debt free as well!
If you have a poor credit record and a bundle of unpaid debts then call our personal debt consultants on 1800 462 767 to arrange a free debt assessment.

It is very important that you be aware of offences in bankruptcy. Some bankruptcy offences can lead to prosecution and imprisonment or fines.
It’s important to know what counts as an offence in bankruptcy. Below is a list of the more common bankruptcy offences:

• makes a false statement in an affidavit (Sec 263A of the Bankruptcy Act).
• a creditor proving a false voting document or proof of debt (Sec 263C of the Bankruptcy Act).
• fails to attend a public examination (Sec 264A of the Bankruptcy Act).
• refuses to answer a question at a public examination (Sec 264C of the Bankruptcy Act).
• fails to provide information relating to property (Sec 265 (a) of the Bankruptcy Act).
• fails to disclose information relating to property disposed of 2 years prior to bankruptcy (Sec 265(b) of the Bankruptcy Act).
• fails to deliver up books and records as requested (Sec 265(c) of the Bankruptcy Act).
• fails to provide any information about the examinable affairs (Sec 265(ca) of the Bankruptcy Act).
• fails or refuses to tell where the books and records relating to the examinable affairs (Sec 265(d) of the Bankruptcy Act).
• fails to inform the trustee in bankruptcy if the bankrupt knows that a proof of debt filed by a creditors is false (Sec 265(g) of the Bankruptcy Act).
• fails to provide a full explanation in the loss or depreciation of assets within 2 years of bankruptcy (Sec 265(h) of the Bankruptcy Act).
• conceals a debt or asset (Sec 265(4)(a)&(b) of the Bankruptcy Act).
• conceals, destroys or falsifies books and records (Sec 265(4)(c) of the Bankruptcy Act).
• grants security over assets that were purchased on credit when and remain unpaid for (Sec 265(4)(e) of the Bankruptcy Act).
• obtains property by fraud (Sec 265(5) of the Bankruptcy Act).
• fails to deal with Trustee in Bankruptcy notice issued under Sec 77 (Sec 265A of the Bankruptcy Act) or provides misleading response.
• provides a false declaration (Sec 267 of the Bankruptcy Act)

Your trustee will report any of these offences to AFSA.  Once reported to AFSA, they may prepare a prosecution referral to the Director of Public Prosecutions and if the offence carries a prison sentence you could be imprisoned..

Did you know that, if you’re in debt, there is a way to pay it off as one loan instead of many little ones? It’s called Debt Consolidation.
There are many ways of doing this, but the principle is always the same.
Being in debt is a very stressful and tricky process. You must keep up with monthly payments, and if you miss any there are strict consequences. These consequences lead you into more debt and owing more fees than you initially had. This can go on and on, until you are in so much debt you think your head might explode!
That is why debt consolidation is such an appealing option for getting out of that debt spiral. It puts all of your individual payments into one big payment. This may seem slightly scary, but causes those little consequences that debt has, to almost go away and can help you budget and know exactly what you owe.
With some professional advice and planning, consolidating your debts is sounding like the best way to go. As always there are several processes to go through so speak to a financial service company that specializes in getting people out of debt so you know more.   

If you go bankrupt, you will still be able to keep some assets.  The government’s policy is if you go bankrupt, you must be allowed to survive and still maintain a minimum level of comfort.  The aim is not to have you live on the streets and with that policy in mind the government has protected certain assets in bankruptcy (up to the specified limits):

• Car – You can keep a car worth up to $7,350. If your car exceeds that value you will need to surrender it to your trustee in bankruptcy. The trustee will then sell the car and remit the $7,350 to you so that you can buy a cheaper car. The excess will be kept by your trustee and will be paid into your bankrupt estate.
• Income – You can keep your wage up to $967.92 p.w. (after tax).  If you exceed this amount and have no dependents you will have to make statutory income contributions to your trustee in bankruptcy.
• Tools of Trade – if you are dependent on tools to earn a living (ie a tradesman) then you are allowed to keep tools worth up to $3,600.
• Household Furniture – You are able to keep necessary household furniture and personal possessions as well as educational and sporting equipment.
• Sentimental Items – Item of sentimental value must be declared to your Trustee and they can only be kept if the creditors approve it.
• Superannuation – most superannuation funds are protected but only if it is a complying fund and you haven’t paid any excessive contributions into the fund prior to bankruptcy. Excessive contributions prior to bankruptcy can be clawed back.

If you are considering bankruptcy, you should also carefully consider the restrictions which will be placed on you. Before declaring yourself bankrupt, make sure you speak to a personal debt advisor. We offer a free debt assessment for all people considering bankruptcy, so call today on 1800 462 767.

Some companies may try and tell you that it is best to avoid bankruptcy at all costs, but this is not always the case. Every case needs to be individually assessed and if you are a low income earner with few or no assets to protect, then bankruptcy will most likely be the best option.

John called Debt Free Australia – here is a case study of his experience

“My income at the time was only  around $1,000 per week in the hand and owned a car worth around $6,000.  I had credit cards and a personal loan which totalled around $20,000 which were causing me constant stress as I couldn’t even afford the minimum repayments.  When I called Debt Free Australia they explained to me that my income would be fully protected (as it was below the statutory thresholds so I didn’t have to make any compulsory income contributions).  I was also able to keep my car as the value of it was also below the statutory threshold.
After doing research on bankruptcy, I realised that it was my best option.  After 3 years my bankruptcy is over and it has cleared all of my credit cards and personal loan debts.
Thank you – Debt Free Australia – for giving me advice that I could trust.  I now realise that bankruptcy was the best choice & the benefits certainly outweighed the stigma of it”
If you would like to explore the option of Bankruptcy call us today on our toll free advice line on 1800 462 767 and speak with one of personal debt advisors.