Post by braided-rug on Jun 13, 2007 12:34:53 GMT 10
Debt Agreements Can Save You From Bankruptcy
By Colin Lim
Debt Agreements are a low cost flexible alternative to bankruptcy. These agreements are governed by Australian Federal Govt legislation and managed by the Insolvency and Trustee Service dept (ITSA). Essentially, you as the debtor (the one who owes the money) negotiate with your creditor(s) (the companies/people you owe the money to) a deal to pay off your debt at a level that you can afford thus saving you from having to declare bankruptcy. It also means that your creditor(s) are able to get back part or a majority of their outstanding debt which is a much better alternative than not getting anything at all from someone who has declared bankruptcy.
How Debt Agreements Work
There are a number of different options for the kinds of agreements that can be entered into. The most common one is described below:
# The debt agreement combines all your outstanding unsecured debt into one consolidated debt. Unsecured debt includes credit card debt, outstanding bills of electricity, gas, water etc for your previous address, repossessed cars, personal loans, store credit, etc
# The legislation allows you to make one combined payment on a weekly or fortnightly basis
# When a debt agreement is in place, you will no longer be charged any interest on the outstanding loans and no interest is charged on the consolidated loan either!
# Once you have fully paid your debt agreement, this represents full commitment to your loans for all creditors involved in the debt agreement.
Other examples of agreements include:
# A transfer of property from the debtor to one of more creditors as part or full payment for the outstanding debt
# A moratorium on payment of debts
What You Need to Know About Debt Agreements
Here are some things that you should know about before considering whether debt agreements are for you:
# Creditors have the choice to enter into debt agreements or not. However, if 75% of your creditors agree to the plan, then the rest of the creditors must also accept the plan even if they originally rejected it. This process is handled by ITSA & is enforced as a binding agreement on all creditors.
# Entering into a debt agreement will appear on your credit report and remain there for 7 years. This will have an impact on your future ability to obtain credit however it is definitely not as bad as declaring bankruptcy especially when you have paid off the debt agreement.
# You must disclose all unsecured debt to ITSA
# You may choose to use a Debt Mediation service to assist you in writing these agreements. There are many such services in Australia. Of course this incurs a fee however it may be easier for you to use one.
# If your circumstances change, you may of course elect to increase your monthly payments or pay the full outstanding debt without any penalties
Who Qualifies for Debt Agreements?
Only those that satisfy the following criteria can qualify for debt agreements:
# Your combined debt must exceed $A15,000
# You cannot have been bankrupt, used another debt agreement or given authority under Part X of the Bankruptcy Act in the last 10 years
# You must have an after tax income of less than about $A54,927.60 (as of April 2007)
# You must have a combined unsecured debt of less than about $73,236.80 (as of April 2007)
# You cannot have assets of more than about $73,236.80 (as of April 2007).
For more information about debt agreements, contact the Australian Govt Insolvency and Trustee Service dept or a debt mediation service.
For more solutions to your debt problems visit www.debtsolutionsportal.com
Article Source: EzineArticles.com/?expert=Colin_Lim
By Colin Lim
Debt Agreements are a low cost flexible alternative to bankruptcy. These agreements are governed by Australian Federal Govt legislation and managed by the Insolvency and Trustee Service dept (ITSA). Essentially, you as the debtor (the one who owes the money) negotiate with your creditor(s) (the companies/people you owe the money to) a deal to pay off your debt at a level that you can afford thus saving you from having to declare bankruptcy. It also means that your creditor(s) are able to get back part or a majority of their outstanding debt which is a much better alternative than not getting anything at all from someone who has declared bankruptcy.
How Debt Agreements Work
There are a number of different options for the kinds of agreements that can be entered into. The most common one is described below:
# The debt agreement combines all your outstanding unsecured debt into one consolidated debt. Unsecured debt includes credit card debt, outstanding bills of electricity, gas, water etc for your previous address, repossessed cars, personal loans, store credit, etc
# The legislation allows you to make one combined payment on a weekly or fortnightly basis
# When a debt agreement is in place, you will no longer be charged any interest on the outstanding loans and no interest is charged on the consolidated loan either!
# Once you have fully paid your debt agreement, this represents full commitment to your loans for all creditors involved in the debt agreement.
Other examples of agreements include:
# A transfer of property from the debtor to one of more creditors as part or full payment for the outstanding debt
# A moratorium on payment of debts
What You Need to Know About Debt Agreements
Here are some things that you should know about before considering whether debt agreements are for you:
# Creditors have the choice to enter into debt agreements or not. However, if 75% of your creditors agree to the plan, then the rest of the creditors must also accept the plan even if they originally rejected it. This process is handled by ITSA & is enforced as a binding agreement on all creditors.
# Entering into a debt agreement will appear on your credit report and remain there for 7 years. This will have an impact on your future ability to obtain credit however it is definitely not as bad as declaring bankruptcy especially when you have paid off the debt agreement.
# You must disclose all unsecured debt to ITSA
# You may choose to use a Debt Mediation service to assist you in writing these agreements. There are many such services in Australia. Of course this incurs a fee however it may be easier for you to use one.
# If your circumstances change, you may of course elect to increase your monthly payments or pay the full outstanding debt without any penalties
Who Qualifies for Debt Agreements?
Only those that satisfy the following criteria can qualify for debt agreements:
# Your combined debt must exceed $A15,000
# You cannot have been bankrupt, used another debt agreement or given authority under Part X of the Bankruptcy Act in the last 10 years
# You must have an after tax income of less than about $A54,927.60 (as of April 2007)
# You must have a combined unsecured debt of less than about $73,236.80 (as of April 2007)
# You cannot have assets of more than about $73,236.80 (as of April 2007).
For more information about debt agreements, contact the Australian Govt Insolvency and Trustee Service dept or a debt mediation service.
For more solutions to your debt problems visit www.debtsolutionsportal.com
Article Source: EzineArticles.com/?expert=Colin_Lim