A debt agreement can be a flexible way to settle debts without entering into bankruptcy. A debt agreement is a legally binding contract with your creditors to repay your debt at a rate which you can afford.

Some people hold negative views about debt agreements, often because they don’t fully understand how they work. If you’re suffering from endless debt, then don’t let these myths block you from a path to financial freedom! In order to help you understand these myths, we discuss the 3 most discussed concerns.

Myth 1: Your credit rating will be ruined forever by entering into a debt agreement.

Debt agreements won’t damage your credit rating forever.

Changes to the Privacy Act were implemented in March 2014 so that information recorded on your credit file can only be stored for five years. So the record of a debt agreement will be eliminated from your credit file after 5 years from the time that you entered into it.

Myth 2: A debt agreement has no difference to bankruptcy.

 Debt agreements and bankruptcy are documented under different sections of the Bankruptcy Act so the government want there to be clear differences.

Under a debt agreement your assets will be protected, whereas under bankruptcy your assets will be lost if they exceed the statutory thresholds.

Under a debt agreement you are free to travel, whereas under bankruptcy you need the permission of your trustee to travel overseas.

There are many other differences.

Myth 3: A debt agreement is not a genuine debt relief solution

Debt agreements were legislated in 1996 and are dealt with under section Part 9 of the Bankruptcy Act, so they are a genuine debt relief solution for certain people. It is important however, to choose a reputable debt relief company. At the Debt Agreement Advice Centre we don’t charge any fees until we have done a full financial assessment to make sure that a debt agreement will be appropriate for you. Don’t pay any company any money until they have done a full financial assessment and have drafted the debt agreement proposal for you.

At the Debt Agreement Advice Centre, we have years of experience in helping Australians with Debt Agreements. If you would like to find out more and see how we can help you, please call our friendly Debt Agreement consultants for expert debt advice on 1800 653 485.