The purpose of a Debt Agreement is to be a good alternative to Bankruptcy, both for you and for your creditors. It is an arrangement that was designed by the government to help those people who are unable to pay their debts in full, but are able to pay enough to keep them from having to declare Bankruptcy. A Debt Agreement is governed by the same Act that Bankruptcy is, this means that all of your creditors are treated equally and the best result is achieved by all parties.
When calculating your Debt Agreement Proposal, there are two main things that need to be taken into account. The first is that it is affordable for you, because there is no point in committing you to a payment arrangement that you cannot fulfil. Secondly, it is important to ensure that your proposal is going to be acceptable to your creditors. Your proposal could be rejected if they think that it wouldn’t be worth their while, or if they can see that you have assets that could be used to pay back even more of the debt.
Most Debt Agreement Proposal payments are a fairly simple matter of ‘income’ minus ‘essential expenditure’. A professional Debt Agreement Administrator will work with you to ensure that all of your expenses, even those that only come up every year or quarter, are accounted for, and that the surplus amount that you are pledging is definitely going to be affordable for you. Out of that amount they will then determine how much is needed for government charges and the Administrator’s fees, and then from there, what percentage return your creditors will receive.
If your proposed return doesn’t look as if it will be satisfactory to your creditors, there is sometimes scope for a little creativity. Some people have an asset that they would be willing to sell during the course of the agreement, or a spouse or family member who is able to help. You can also agree to increase your payments as you pay off other arrangements during the term of the agreement, such as a car loan or a whitegoods lease.
An experienced Debt Agreement Administrator will be able to advise you on what is necessary to put the best possible proposal forward, based on your income and assets, your financial commitments, and the expectations of your creditors. Here at Debt Free Australia we have been drafting Debt Agreement Proposals for over seven years, so we know what it is that your creditors are likely to accept.
Call us today on 1800 462 767 to discuss a payment arrangement that is going to work for you and your unique situation. We offer a free debt assessment and will not charge you one cent until we are confident that your debt agreement proposal will be acceptable to your creditors.