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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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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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What is a Statutory Demand? (2023 Guide for new business owners)

What is a Statutory Demand? (2023 Guide for new business owners)

If your business has accrued unpaid debts, your creditors may choose to serve you with a statutory demand. A statutory demand is a form of debt collection tactic that, when used, has repercussions for your company. You must take action as soon as possible after receiving a statutory demand, even if you need some time to consult a and consider your options.

What is a statutory demand?

 According to Section 459E of the Corporations Act 2001 (the Act), a statutory demand is a written demand made on a debtor by a creditor. In essence, it’s a method for the creditors to pressure the debtor into paying their unpaid debt. The statutory demand should meet the following requirements:

The minimum debt amount: The debt for which payment is being requested shall be for an amount in excess of two thousand dollars ($2,000) and shall include any interest payable on the date of the request.

 Mandatory form: The statutory demand needs to be in the format that has been approved (Form 509H).

Debt type: The debt must be one that is already past due and payable on the date of the demand. The debt cannot be unliquidated damage or future liabilities, nor may it contain either.

The process for serving statutory demands

 Statutory demands are not presented before a judge. They need only be served in accordance with the procedures established in Section 109X of the Act. If the demand is posted, delivered, left at, or delivered directly to a director of the firm, it will have been served. The registration address of the company can be found by searching the ASIC database.

What are your options if you receive a statutory demand?

 If you receive a statutory demand, the most important thing to remember is that you need to take action immediately. To learn more about your options, it is advisable to consult with insolvency professionals like Debt Free Australia. You can choose one of three options depending on the situation:

Pay the debt: If you are able to, the best course of action is to immediately pay the debt.

Negotiate and agree: Another choice is to negotiate and come to an agreement or repayment plan. The creditor’s willingness to cooperate  and your ability to make repayments will determine if you can reach a deal that works for all parties.

Set Aside: Apply to the court to have the statutory demand set aside as a third option (Section 459G). You must meet the requirements for having it overturned and send in your request within 21 days of receiving the demand.

 Implications of ignoring a statutory demand

 It is strongly advised NOT to ignore a statutory demand if you have received one. If you do so, your business will be presumed insolvent (Section 459C(2)) 21 days after the statutory demand is served (Section 459F). No matter whether your finances and records indicate that you are in fact solvent, this still applies to you. When there is a probability of insolvency, the creditor may ask the court to wind up your business (under 459P). It is even more important to take action immediately if you eventually receive a wind-up notice.

If you are a new business owner and want to learn more about statutory demands, or if you have received one, we highly recommend you seek professional advice.

At Debt Free Australia we will provide impartial advice which will suit your circumstances. Our Registered Liquidator has many years of experience and can provide 24/7 debt advice. Call us now on 1800 676 598.


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Credit card traps to avoid

Credit cards are designed for convenience and can be a useful financial tool if used properly. However, credit cards can also lead you down a path of costly debt that end up costing you more than you realise. See below for credit card traps that you should avoid:

1. Minimum repayments
When making repayments you may feel the need to just cover the minimum repayment which will vary from 1% to 3% of your total balance. Whilst you may feel on the right track, overtime the balancing remaining will accrue interest and end up costing a lot more in the long run. Hence ideally you would want to pay your credit bill in full, or at least the maximum you can afford to pay to reduce your overall interest costs.

2. Cash advances
Using your card to make a cash advance can be expensive as they can accrue a much higher rate of interest straight away (from 22% to 30%) with additional fees. To avoid this, use your debit card for ATM withdrawals or a credit card issued by a credit union.

3. Rewards and points
Credit cards with a reward program may often entice the cardholder through free flights or cash back every time you spend. Some people end up spending more on their credit cards than otherwise to chase for rewards or bonus points. However, often these cards will also come with higher interest rates.The interest you accumulate may easily outweigh the rewards you earn.

4. Interest free periods
There are a lot of credit card providers that offer interest-free or very low interest rate periods. This period will often last up to 12 months before they rise to normal interest rates or interest rates as high as 30%. Hence always read the fine print when entering such deals to prevent yourself from falling into this trap.

Struggling to meet credit card repayments is a problem faced by many Australians. If you need credit card debt help and advice, or think you have reached the stage where a formal debt solution (such as filing for bankruptcy) is required, call the insolvency experts at Debt Free Australia on 1800 676 598.

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5 Reasons for failure in Australian Small Business

5 Reasons for failure in Australian Small Business

As a small business owner, you’re likely aware of the facts about small businesses and Australia’s high business failure rate. 60% of enterprises fail during the first 3 years, and half of those that fail are profitable.

Although these are grim figures, it’s vital to remember that, as a business owner, you can take a number of measures to ensure that your company survives and develops rather than fails like so many others.

That is why we have compiled a list of the main reasons behind Australia’s high business failure rate… so that you can prevent these blunders in your own company!

Inadequate due diligence while starting a business or purchasing an existing one.

It might be expensive to enter a business without doing your research. Enthusiasm and excitement frequently take precedence over careful thought and planning. Given how simple it is to create an online business, it is clear that there has been a lack of strategic preparation and thought.

These are a few questions that are frequently overlooked before a business launches:

  • Did you comprehend what you were committing to?
  • What issues did you not foresee when you looked at the chance of running a successful business?
  • Have you looked at the idea from all sides?

Poor Financial Management

Ineffective management can ruin a business’s finances more than anything else! This significant issue contributes to Australia’s high percentage of business failures. However, any firm, especially a small one, needs a solid financial foundation to succeed. You should outsource this if you don’t understand accounting, bookkeeping, or financing. Although you don’t need to hire a professional bookkeeper, you should have one on board to ensure everything is operating well.

As a result, you may better understand your finances and make decisions for your company that will benefit it.

Inability to repay debts

No matter how big or small, every firm has this ongoing problem. Businesses that try to use the money they don’t now have to finance future expansion put themselves at risk.

This dilemma affects some industries more than others. The most vulnerable are service providers and tradespeople, who are paid after completing a job. Nobody enjoys a consumer or client who doesn’t pay. As part of small business training, strategies for dealing with debtors must be in place.

Poor record keeping

It would be like trying to drive a car while wearing a blindfold if proper business records weren’t maintained to allow knowledge of how the company was operating. It should be evident that businesses that do not keep accurate records cannot address this issue in a useful manner.

A successful small business needs to have well-defined financial objectives and be constantly aware of how those objectives are being met. The only way to do this is to provide weekly and monthly financial reporting. If you don’t know what you need to earn to support yourself and the bills, it’s very simple to slip into difficulty.

No online presence.

Before, you might have gotten away without needing a website or a consistent stream of updates on social media, but that strategy is no longer effective. You must now have a website and online presence if you wish to prosper. That excludes even eCommerce and other internet sales channels.

Small business owners must invest time in planning and presence to ensure that their company is successfully operated and readily available to clients. Don’t undervalue this step’s significance or worth!

To sum up, small business owners must invest time in planning and presence to ensure that their operation is efficient and open to clients. Debt Free Australia is available to answer any queries and provide you with more information. Call us at 1800 676 598 to get in touch.

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Pros and Cons of Debt Consolidation

Pros and Cons of Debt Consolidation

Any business will have debt. And while managing various debts can be straightforward at times, it can also be a nightmare at other times. To minimise costs by lowering interest and fees and making it simpler to manage your credit, you can consolidate your debt by reducing all of your loans into one. It means getting a new loan, using the money from the new loan to pay off the old debts, and then paying only the new lender. Consolidating your debts could be a huge help in maintaining responsibility for your financial situation, and understanding when you’re in difficulty is critical to avoiding significant debt and even bankruptcy.

The pros of debt consolidation

  • Lower interest rates and more savings

One interest rate allows payments to spread over a more significant amount of time, resulting in lower payments overall. Additionally, if you consolidate your debts, you won’t have to pay the accumulated penalties, fines, and additional interest fees that result from being unable to pay all of your bills on time.

  • Single Repayment

You will make a single payment based on a single interest rate rather than numerous repayments to numerous lenders. You’ll eventually save money by doing this.

  • Reduce your stress.

Large payments to several lenders at various periods can be exceedingly stressful and confusing. If you fall behind on your payments, you won’t get calls from creditors trying to get their money back.

  • Added features

Access to additional features, such as a set interest rate or locking in payment amounts, is feasible.

  • An alternative to filing for bankruptcy

Avoid bankruptcy since it can damage your credit history.

The Cons of Debt Consolidation

  • Accumulating more debt

In essence, debt consolidation allows you to borrow additional money, which may push you into deeper debt. When your debt is consolidated, you might be tempted to charge more things to your credit card.

  • Foreclosure

You risk losing the asset if you sign a secured debt contract and use an asset, like your business premises, as security.

  • Dubious lenders

Not all debt consolidators are honest and reasonable. Brokers and lenders may prey on those eager to improve their circumstances. Always ask for clarification and exercise caution when dealing with others.

Steps to take while consolidating your debt

  • Understand your current debts: Gather all your credit card, loan, and bill statements in one place to see what you are now paying and still owe.
  • Assess each potential debt consolidation option’s interest rates, fees, and terms and conditions: Make sure you look around before selecting one. You’ll discover that one lender will likely fit your company’s needs more than others.
  • Prepare a strategy: You must negotiate debt management plans with each creditor you have. It’s critical to develop a manageable and suitable debt settlement plan.
  • Whenever you can, make additional payments: Make extra payments when you can if your consolidation loan permits it. You could perhaps pay off your loan sooner and save money on interest because of this.

We advise you to seek advice from professionals with industry experience before proceeding with debt consolidation. Debt Free Australia is ready to assist you with your questions and is available to provide you with additional information about debt consolidation. You can reach us at 1800 676 598.

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Should I use my superannuation to pay off my debt?

It is compulsory in Australia for your employer to make regular payments into your superannuation fund from your salary. Superannuation is designed to pay for your living expenses in retirement. The only time you should access your superannuation before retirement is for serious cases only and it is subject to approval from your superannuation fund.

Superannuation is normally protected from bankruptcy
In most cases superannuation is protected from your creditors whilst you’re bankrupt, unless you purposefully made extra payments into your superannuation fund to avoid paying your creditors. Standard contributions by your employer will be protected whilst you are bankrupt.
Given your superannuation will be protected even if you go bankrupt, there is no reason to use your superannuation funds to pay creditors to avoid bankruptcy. We recommend other options which are discussed below.

Credit Counselling
We recommend that you first seek professional advice from a licenced debt counsellor. The following government website provides extensive information about debt counsellors A licenced debt counsellor will provide impartial advice because they are government funded, meaning they will not be paid for recommending any commercial debt solution. Your debt counsellor may be able to apply for financial hardship with your creditors whilst they advise you on your options. During this period you are not allowed to use your credit cards or incur further debt. Do not engage the services of a commercial debt counsellor as they may not provide impartial advice and instead recommend a commercial debt solution from which they will be paid.

Debt Consolidation
Debt consolidation is the process of paying off multiple debts with a single loan. We recommend that you apply to your local bank or financial institution to see if you are eligible for a debt consolidation loan. You may need a good credit score to apply for a debt consolidation loan. If you are refused a debt consolidation loan then we recommend that you should consider a Debt Agreement, Personal Insolvency Agreement or Bankruptcy.

Debt Agreement or Personal Insolvency Agreement
You may also be eligible for a Debt Agreement or a Personal Insolvency Agreement. Our website provides extensive information on Debt Agreements and Personal Insolvency Agreements

It’s important to research and carefully consider all options before proceeding with any debt solution. We also recommend that you only seek professional advice.

At Debt Free Australia we will provide impartial advice which will suit your circumstances. We have an in house Registered Trustee who can advise you on all aspects of personal debt solutions.

Call our friendly and professional debt advisors today on our 24/7 debt advice hot line on 1800 676 598.

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What Are My Personal Debt Solutions?

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 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.

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

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.




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Three Steps to Surviving Life After Debt

When you experience personal debt, your main goal is to repay these debts. But what happens once you do?
Managing your life after debt is a crucial element in your debt experience. It will determine how financially secure your future is.
Here are the three steps to surviving life after debt.

Don’t beat yourself up for ending up in debt. Sometimes, things happen in life that are out of your control. Whether it is because of external forces or internal circumstances, the best thing that you can do for yourself now is reflect and learn.
Think about why you ended up in debt, not to berate yourself, but to recognise the signs and factors that led to debt and take steps to prevent it from happening again.

Once you have identified why you went into debt, now is that time to learn from it.
For example, you may want to think about setting up and contributing regularly to an emergency account in the case of unexpected situations such as a death or illness in the family, loss of employment and more.
By reflecting and learning from your past mistakes, you are already setting yourself up for a financially brighter future.

Forgive yourself
This may be the hardest step to take. While you may be filled with regrets about what you did or didn’t do, it is important to forgive yourself.
Only then will you be able to truly move past this and pave the way for a better and more secure future.
If you are struggling with your debts and want free and confidential advice, please contact DFA on 1800 676 598. Our phone is toll-free and open 24-hours so there will always be someone available to speak to you.

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