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Debt Relief: Debt Agreement vs. Bankruptcy

Debt Relief: Debt Agreement vs. 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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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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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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All About Debt Agreements

All About Debt Agreements

Debt agreements are unique but comparable to personal insolvency agreements. If you are in a financial difficulty and you can’t pay your debts, you might consider a debt agreement. There are some great reasons to apply for a debt agreement and some details you need to know before proceeding.

With a debt agreement, there are different steps to follow. The debtor must file a debt agreement proposal (DAP) with the Australian Financial Security Authority (AFSA). The DAP provides creditors with a debt repayment plan which usually runs over 3 years.

The great news about a debt agreement is that the debtor can propose how much to repay based on affordability. It will of course be subject to creditor approval.

If payments are made on time, as agreed, the unpaid debt will be forgiven once the agreement is fulfilled.

A debt agreement is more flexible and less intrusive than bankruptcy and is suited to people who want to protect their house or other assets from being sold.

For more information and assistance with debt agreements, Debt Free Australia can assist you. Contact us at 1800 676 598 or feel free to visit our website. We look forward to helping you with your debt repayment plans and answering your questions.

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Why Seek Professional Financial Help?

If you’ve ever experienced overwhelming debt, you know firsthand how difficult it is to see through to the other side. Your finances consume your thoughts and your down-time is spent worrying. You feel trapped by your debt, and more often than not you are always thinking about the worst-case scenario.

When you seek the help of an impartial, experienced professional at Debt Free Australia, you will receive a financial assessment specific to your situation. Our debt advisors will consider all of the options available to you and explain in detail how each is likely to affect you, covering both the good and the bad. Our professionals will open your eyes to a world of possibilities that you have likely not considered.

Debt Free Australia (DFA), a team of experienced, licensed debt advisors, offers 24 hour financial advice that is completely free and confidential. What many who are struggling with debt fail to think about, DFA takes into consideration. Factors like how affordable a solution really is, how long it will last, how it will affect your credit rating, if it will protect your assets, and many more. By considering all of these aspects, including your own personal needs and wants, DFA is confident that they can provide you with the best possible solution for your financial situation.

Once you have chosen the right debt solution, you won’t be left alone. DFA is fully licensed to offer you services in bankruptcy, Personal Insolvency Agreements and Debt Agreements, allowing them to work with you from beginning to end. By choosing DFA, you receive advice and service in the one place.

If you need further reason to seek professional help, the many testimonials of Australians who were once in your shoes should be encouragement enough. Many of DFA’s clients believed that their only option for managing their debts was to declare bankruptcy. After seeking the advice of an expert, many of these clients were able to resolve their issues by refinancing their loans, or entering into a three- to five-year Debt Agreement or Personal Insolvency Agreement, putting them on track to become debt free. For those who did indeed need to file for bankruptcy, DFA assisted them throughout the process, making it as seamless as possible.

If you are struggling with your finances and feeling the weight of your debts holding you down, seeking a professional’s opinion is in your best interests. DFA will offer you personalised options, making your search for a debt solution as easy as possible for you. If you are unable to imagine a world where you can live debt free, call DFA today at 1800 676 598 for free advice and more information on our services.

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Understanding Personal Debt Agreements

Understanding Personal Debt Agreements

Entering a personal debt agreement can be beneficial to your financial situation. There are many pros, as well as cons, to agreeing to the terms of this document. Today, we will talk about what personal debt agreements are, how they work, and other essential details you need to know to help you if you choose to create a personal debt agreement.

What is a Personal Debt Agreement? 

A personal debt agreement is a legally binding agreement between you and the creditors you owe. In these situations, you agree to terms that you have discussed with your creditors. You may negotiate specific terms, pay a percentage of your debt over time, or make repayments to the debt agreement administrator rather than the creditor.

Can the Creditor Request All of the Money? 

If you negotiate on a specific amount of debt paid back, the creditor cannot request additional funds beyond what has been specified in the debt agreement. There are limitations based on your income and the debt owed.

What Do I Need to Do Beforehand?

Before signing a debt agreement or discussing this option, you should consult with experts. Figure out your options, and be sure that a personal debt agreement would be the right decision for you and your family. You should also fully understand the consequences before signing the final document.

Let Debt Free Australia Assist You

For more information about personal debt agreements and how they could benefit your situation, Debt Free Australia is here to help. To contact us regarding our services, contact us either here or through our toll-free hotline at 1800 676 598.

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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 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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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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