If you are considering applying for a Debt Agreement, there are many important factors you need to consider. Debt Free Australia (DFA) has compiled a list of the main benefits and consequences of entering into a Debt Agreement.
The good:

  • The required repayments under a Debt Agreement are based on the amount you can afford –not the amount your creditors want.
  • Repayments can be made flexible, allowing you to maximise your available funds and still meet your existing financial commitments (eg., your car leases and mortgages). Your repayments will correspond to your payroll cycle,making it easier to budget.
  • Once you lodge a Debt Agreement with AFSA, any pending or current legal action for debt recovery will be suspended. If your creditors accept the proposal, any legal action against you will be cancelled.
  • Once your Debt Agreement is accepted, interest on your debts will be frozen, meaning that your repayments will actually reduce the amount of your debt.
  • A Debt Agreement lasts for anywhere between 3-5 years, giving you a foreseeable end to your debt repayments.
  • You will be able to keep your car, house and other assets – as long as payments for these are maintained.
  • There are less restrictions under a Debt Agreement than in a bankruptcy; for instance, you will be free to travel abroad.

The bad:

  • There will be a permanent record of your Debt Agreement kept on the National Personal Insolvency Index.
  • Your involvement in a Debt Agreement will be recorded on credit reporting databases for a minimum of five years.
  • Aside from the mark on your credit file, there will be restrictions placed on your applying for more credit during the time that you are under the Debt Agreement.

If you have weighed up the pros and cons and determined that entering into a Debt Agreement is the best debt solution for you, DFA can help.
At DFA, we have a proven track record in helping Australians successfully settle their unaffordable debt through Debt Agreements.
For more information or free financial advice, call DFA today on 1800 676 598.