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How to Manage Debt

How to Manage Debt

Having debt can be beneficial if you are able to manage it effectively. This is because not all debts are the same – there is ‘good debt’ and ‘bad debt’. For instance, if you have taken on a loan to invest in stocks, it is usually considered ‘good debt’. If you have borrowed money to pay off your credit card loan, that would be regarded as ‘bad debt’ since the debt will not yield any value over time or add to your wealth. In the following article, we offer some tips to help you manage your debt so you can begin your path towards a brighter financial future.

Tips to Manage Debts

1. Make a budget

Make a budget to see how much of your earnings are going to servicing debt and how much is spent on interest and processing fees.

2. Assess what you owe, earn and spend

If you have more cash outflows than inflows, you need to re-evaluate your finances to see where you can cut down on non-essentials and pay off your debt quicker.

3. Group your debts

Having multiple debts means paying multiple fees and interest charges, which push up your debt. Try to group and renegotiate your debt to pay a single and lower interest rate.

4. Pay as much as you can on time

When repaying debt, you usually get an option of how much you have to pay. Try to pay as much as you can, rather than the minimum amount. Check your lender to see if they allow extra repayments and make additional payments to let your debt decrease quicker and save on interest charges.

5. Have a savings plan

Whilst it is necessary to repay debt, you should also have a rainy-day fund ready for any accident or mishap that could affect your income or debt repayment capacity.

6. Reach out to Debt Free Australia for help

If you are facing problems in repaying your debt, reach out to us to discuss your situation.

If you need professional debt help, contact Debt Free Australia today. We’ve helped thousands of Australians with their debt problems, so you can trust that we can help you too. Our licensed financial advisers offer impartial and confidential advice so call us today, free of charge, on 1800 676 598.

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How will my Debt be Collected from a Creditor?

How will my Debt be Collected from a Creditor?

The debt collection process is not simply a person knocking on your office door and asking for their debts to be repaid. There are guidelines set out by the Australian Competition Consumer Commission (ACCC) and the Australian Securities and Investment Commission (ASIC) which dictates how debt collection agencies operate.

Creditors will generally take steps to avoid dealing with clients who are likely to not pay their debts in the first place such as completing background checks on you and your credit history. They may also choose to draw up a legally binding contract which informs you of the consequences if you miss a payment. However, if you owe large sums of debt and have not paid it, you can potentially expect a creditor to employ the assistance of a debt collection agency to follow up on unpaid invoices.

The agency will then:
1. Gather as much information as possible about you and the nature of the debt.
2. Make contact with you through a phone call, email or letter.
3. Send you a debt collection letter.
4. Issue a Service of Complaint if the attempt to contact fails or if you have refused to pay the debt. Under these circumstances, there will be strong evidence that entitles the debt to be paid. The creditor can then choose to bring the matter to Court. If you do not respond to the Service of Complaint, you will be required to pay the debt and the Court will rule in the creditor’s favour.

Finally, you will then be forced to make a payment arrangement.

If you need professional debt help, contact Debt Free Australia today, free of charge on 1800 676 598. We’ve helped thousands of Australians with their debt problems so you can trust us to help you too. Our licensed financial advisers offer impartial and confidential advice to help you build a secure financial future.

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Debt Relief: Debt Agreement V. Bankruptcy

Debt Relief: Debt Agreement V. Bankruptcy

When you’re drowning in debt, you have a few relief options. Two of the most common options are declaring bankruptcy or entering a debt agreement.

But which solution is right for you? Today, we compare a debt agreement and bankruptcy.

Debt Agreement

A personal debt agreement is an agreement between you and your creditors. It is a flexible way to pay off debt without filing for bankruptcy.

You can negotiate to pay an affordable percentage of your combined debt. Instead of paying to your creditors, you pay to your debt agreement administrator. Additionally, the interest will be frozen.

After you complete your payments, creditors can’t collect the rest of the money you owe. If you don’t qualify to file for bankruptcy, a debt agreement is the best solution.

However, there are limits to debt agreements. Depending on your income and amount of debt, you may not be eligible for a debt agreement.

Bankruptcy

Filing bankruptcy may seem like the easier solution to your financial woes, but it may not be suitable for you. Bankruptcy does come with certain restrictions, and your assets may be seized.

When you declare bankruptcy, you will have a trustee manage your debts. They will own your property and assets and be in control of how it is distributed to creditors.

If you have assets you want to hold on to, bankruptcy may not be the right solution for you. Things like jewellery, money in financial institutions, stocks, shares, and other assets will be transferred to your trustee.

Declaring bankruptcy also has long-term effects. Bankruptcy will be visible on your credit report for 5 years but will stay on the National Personal Insolvency Index forever.

Which is Best For You?

Bankruptcy and debt agreement help relieve some of the financial burdens, but they come with their own positives and caveats.

Debt agreements allow you to pay off your debt while keeping your assets. However, a debt agreement only applies to unsecured debts. Also, there are limitations on how much debt you can claim.

Bankruptcy makes paying down debt manageable, but it requires you to relinquish your assets. It also prevents you from operating a business and travelling overseas without permission of your trustee.

Your financial situation is unique, and it calls for the perfect solution. Our professionals are here to help.

To speak with an experienced debt consultant about declaring bankruptcy or arranging a debt agreement, contact us.

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Need Debt Help? Here Are Your Options

People find themselves in financial trouble for all kinds of reasons. In times of financial distress, it helps to know one’s options.
Debt Free Australia (DFA) has put together a list of the formal debt solution options available to you:

Debt Agreement

The first option for those seeking debt help is aDebt Agreement. A Debt Agreement is an arrangement between a debtor and his/her creditors that allows them to repay an agreed amount over a certain period of time. In many cases, debtors can settle their debts for less than what was originally owed. To learn more about Debt Agreements, click here.

Personal Insolvency Agreement (PIA)

A PIA is another legally binding agreement available for those seeking debt help. It is a similar arrangement to a Debt Agreement, but is suited to those with higher levels of debt and/or income. Only people who are genuinely struggling with their debt can enter into a PIA or DA. To learn more about PIAs, click here.

Bankruptcy

Bankruptcy is an appropriate solution for debtors who have reached the point of no return. Although it has more serious consequences than the other options, it is a legitimate way for you to get out of debt, start fresh and move on with your life. To learn more about bankruptcy, click here.
DFA’s Registered Bankruptcy Trustees have years of experience in helping Australians along their bankruptcy journey. To speak to a Registered Trustee today, call 1800 676 598.

Don’t let it spiral out of control

The golden rule of dealing with debt is to act immediately after the warning signs appear. The worst thing you can do is brush it under the carpet and let your debt snowball out of control.

Call our free debt help hotline today

If you need professional debt help, contact DFA today.
We’ve helped thousands of Australians with their debt problems, so you can trust that we can help you too.
Our licensed financial advisers offer impartial and confidential advice for anyone looking for help with their debt. Call one of our insolvency experts now, free of charge, on 1800 676 598.

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How Does Debt Consolidation Work?

How Does Debt Consolidation Work?

It is common for people to find themselves in a position where they have to pay off more than one debt at once. If you are struggling to balance multiple debt repayments, it is worth considering debt consolidation.

Debt consolidation is the process of taking all your current debts and putting them into one new debt. It can assist you in managing your repayments and make you feel more confident about your financial future. It is typically done by taking out a new personal loan in order to repay your other debts, and then making repayments on this loan over a set period of time.

For example, if you have three credit cards with debts of $500, $4000, and $6000, it is likely that you also have three different interest rates and are making repayments at three different times each month. This might feel complicated and overwhelming when managing your budget and bills.

You have the option to consolidate your debts by taking out one loan to pay off each credit card and any interest owed. Then, you will just need to make one repayment every week, fortnight or month over a given time — you can choose how often you would like to make repayments. If your personal loan interest rate is lower than your credit card rates, this can help you reduce your total debt.

In summary, the advantages of a debt consolidation would be a simpler management of repayments, a potentially lower interest rate, and a clear time in your head of when you’ll be debt-free.

At Debt Free Australia, we understand that the process of finding the right solution is difficult. This is why it is important to enlist the assistance of highly trained consultants who can take you through all your options and help you determine what is the best option for you. Our consultants at Debt Free Australia are experienced, professional and passionate about helping Australians recover from debt troubles to lead a better financial afterlife.

To find out more about how we can help you, call us today on our toll-free advice line on 1800 676 598.

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How to Find the Right Debt Solution For You

While you may not be the only Australian struggling with personal debt issues, every person’s situation is different and so it is important to find the debt solution that is right for your individual circumstance.

However, finding the best option is easier said than done. There are many personal debt solutions available that can make this process very confusing and frustrating. This is why it is crucial that you enlist the help of an experienced and knowledgeable debt administrator who can assist you in determining the best option.

How to choose the best debt solution for your situation

There are many factors that you need to consider when choosing a debt solution.
You need to take into account:

1. How long the implications will last.

Every solution will last for a certain amount of time. For example, if you file for bankruptcy, you will be considered bankrupt for 3 years and 1 day. The time for a Debt Agreement can be between 3 to 5 years.

2. How it will affect your credit rating.

Your credit rating will be affected once you enter most debt solutions. However, each solution will have different effects on your credit file. Those who enter into a Debt Agreement or a Personal Insolvency Agreement will have a default placed on their credit file for a minimum of 5 years. The default for Bankruptcy is also 5 years.

3. Will your travelling be restricted?

There are certain debt solutions which will restrict your ability to freely travel, while there are others that won’t. Filing for bankruptcy will limit your ability to travel overseas without the prior written permission from your Trustee in Bankruptcy. With a Debt Agreement (for example) no written permission is required.

4. How it will affect your employment.

In some cases, some debt solutions will affect your current employment or ability to apply for other jobs. For example, if you have filed for bankruptcy, you will not be eligible to be a Gaming room employee, Justice of the Peace, Police Officer and more. This is why it is vital that you really research the full implications of each solution to lessen the effect on your future.

5. Which of your assets will be protected?

Depending on which debt solution you choose, some of your assets may be protected while some may not be. If you file for bankruptcy, the Bankruptcy Act allows you to keep certain items such as most ordinary household goods.

At Debt Free Australia, we understand that the process of finding the right solution is difficult. This is why it is important to enlist the assistance of highly trained consultants who can take you through all your options and help you determine what is the best option for you. The consultants at Debt Free Australia are experienced, professional and passionate about helping Australians recover from debt troubles to lead a better financial afterlife.

To find out more about how we can help you, call us today on our toll-free advice line on 1800 676 598.

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Why A Debt Agreement Can Be A Better Option Than Bankruptcy

Are you struggling to repay your debts but want to avoid filing for bankruptcy? At Debt Free Australia, we can offer an alternative solution to mending your debt problems: through a Debt Agreement.

A Debt Agreement is a legal alternative to bankruptcy in which you arrange to pay a certain amount back to your unsecured creditors over a set period of time (generally 3 to 5 years).

Although entering into a Debt Agreement is an effective way to help resolve your debt problems and avoid the harsh repercussions of bankruptcy, it is important to be aware of the consequences associated with it.

Debt Agreement consequences include:

  • A listing of the Debt Agreement on your credit file for a minimum of 5 years (if the agreement runs for longer than 5 years, the listing will remain until it is completed).
  • Your name will be listed on the National Personal Insolvency Index (NPII) which is maintained by AFSA. This NPII is accessible by anyone upon paying a fee.

These consequences of a Debt Agreement are unavoidable, however, it is important to also look at the benefits in proposing this agreement, particularly when comparing it to bankruptcy – a far worse off scenario.
Some benefits include:

  • The interest on your unsecured debt will be frozen
  • You will not be restricted from travelling overseas
  • It does not require you to sell any assets, such as your home, that have available equity

Get in touch today

At Debt Free Australia, we have a registered Debt Agreement Administrator who can help with your Debt Agreement.

Call one of our qualified experts today for free on 1800 676 598. We will explain how the Debt Agreement is likely to affect you and assess whether it is a suitable option for you. You will not be charged a cent until we determine that you are fully eligible and able to propose a Debt Agreement, and of course, until you decide that you wish to go ahead.

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JobKeeper – advantages and disadvantages for your firm

The JobKeeper program provides a wage subsidy to workers up to $1,500 per fortnight to the end of September. Due to the surge of cases in Victoria and Melbourne city lockdown, the program has been extended to the 28th March 2021 with new pay rates. Below explores some advantages and disadvantages of applying (or reapplying) for JobKeeper:

Advantages

The JobKeeper program has been a lifesaver for many businesses as it offers both a financial and business boost. By avoiding redundancies you are able to keep people employed during harsh economic times which will reduce the cost of rehiring staff later down the track and allow you to retain talent. Furthermore, it offers a long term advantage by building employee loyalty and a stronger workplace culture where you have put their best interest at heart.

Disadvantages

A key disadvantage from the program is the potential of making future redundancies more costly as the employees will continue to accrue entitlements and annual leave. Where they are let go, these entitlements will have to be paid out from cash reserves or from non-existent profits. Something else to consider is the potential cash flow issues that may also arise as you will need to pay staff first before receiving the JobKeeper subsidy in arrears.

Overall, you should be aware of the advantages and disadvantages of the program before making the decision. If your business is struggling financially or you’re considering reapplying for JobKeeper and would like to learn more, please talk to Debt Free Australia for free and confidential advice on our 24/7 toll-free hotline on 1800 676 598.

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4 Business Trends To Watch Out For In 2020

With 2020 filled with many uncertainties, businesses worldwide have been forced to adapt to a new normal. It is crucial for your business to take advantage of these emerging trends as early as possible. Below are 4 business trends to watch out for:

1. Remote work is the new normal

Increasingly, businesses are embracing working from home in the long term. Businesses are noticing various benefits from this arrangement, such as reducing office space and not limiting hires based on geographic proximity.

2. Word of mouth and user reviews

With the majority of purchases now made online, consumers are turning towards purchases based on word of mouth (on their social media platforms) and user reviews. We will see more businesses investing in obtaining more user reviews for their products and services.

3. Changes in customer service

The disruption within the customer service industry has only accelerated the emerging trends. Businesses are starting to look into new ways to provide personalised services and experiences, through the use of tailored digital marketing and social media, compared to more traditional means such as phone and fax, streamlining the whole customer experience.

4. Big data

Having a big data strategy is crucial to ensuring a competitive edge. Ensuring you make the most out of your available data about customers and clients will dictate your marketing and business decisions.

Debt Free Australia is passionate about helping individuals and businesses get out of debt and prepare for a better financial future. If your business is struggling to adapt to the new normal or is looking for a fresh start please get in touch with our highly-trained advisors. Please call us on our 24/7 toll-free hotline on 1800 676 598 to speak to one of our friendly and professional debt relief consultants.

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Financial Planning in Business Response and Recovery

The COVID-19 outbreak has impacted and continues to impact businesses and individuals in a multitude of ways. With unclear economic conditions and the full duration of the pandemic unknown, it has made planning harder than ever. Below are some starting points to consider when looking at business recovery or response:

1. Gaining a clear view of your starting point

It is important to have a clear view of the company’s starting position. The financial plan rolled out for this year and the next 18 months should consider advice from the financial planning team and experts that take into consideration current market and financial trends, and acknowledge changes as a result of the pandemic.

2. Identifying key threats and opportunities

The pandemic has drastically disrupted how businesses and the market operate. The long-lasting and unpredictable impact following the pandemic means businesses need to be prepared for any new opportunities and risks to ensure its long term survival.

3. Developing a range of scenarios

Developing three or four scenarios for how the pandemic might impact your business, from best to the worst case should be explored. Rather than trying to be overly precise, it is more important to use conservative estimates and assumptions.

4. Establishing a direction to action

You will need to decide which scenarios make the most sense to pursue and create a detailed financial plan around them. This will allow you to make a more informed recovery or response action plan. This can range from focusing on restoring business operations as quickly as possible to shaping a whole new business.

Debt Free Australia is passionate about helping individuals and businesses get out of debt and prepare for a better financial future. Our highly-trained consultants can help you carefully consider all of your debt solution options. Please call us on our 24/7 toll-free hotline on 1800 676 598 to speak to one of our friendly and professional debt relief consultants.

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