If you are struggling to pay your credit card debts you can try to come to some sort of temporary arrangement with your creditors. This is usually known as hardship, a process by which they will assess your application for assistance and, if they deem you qualified for it, may do such things as freeze the interest on your account for a period of time, or grant you a moratorium on your repayments. These arrangements are not binding on your creditors though, and they are not permanent (the average term is around 3 months); they are known as “informal” arrangements.
If you are unable to come to such an arrangement with your banks, or if it is not going to give you as much assistance as you need, you may want to consider a “formal” arrangement. Formal arrangements to manage your debt are legally binding, mediated by a third party, and governed by the body that regulates insolvency actions in Australia, which is the Australian Financial Security Authority. There are two such arrangements, which allow you to settle your debts with your creditors at a reduced amount, and these are known as a Debt Agreement and a Personal Insolvency Agreement.
Debt Agreements and Personal Insolvency Agreements are the same sort of arrangement, although a Debt Agreement is usually the most popular, as their availability to you is dependent on how much you owe, how much you earn, and what you have in the way of assets. Essentially, the agreement is a legally binding one whereby you will pay a certain amount into it over a period of 3-5 years and, providing it is completed, this amount is accepted in full and final settlement of all of your unsecured debts. There are many advantages to choosing a formal solution such as this over an informal one, in that the interest on your debts is frozen, it is binding and permanent, and unlike individual informal arrangements that must be negotiated and agreed to by all of your creditors separately, a formal arrangement encompasses all of your unsecured debts; you just need the majority of them to accept it.
If you feel that you are in need of a formal solution to your debts such as a Debt Agreement, call one of our friendly consultants today on 1800 462 767. We can help you to establish whether or not it might be a good option for you, and give you all of the information that you need so that you can make an informed decision.