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.

If you’re currently in a situation where your debt is getting out of control, you may be exploring some potential debt solution options. A debt agreement is a genuine alternative to bankruptcy which can solve most debt problems. We’ve written up the process of how Debt Agreements work in order to give you some insight before you make any financial decision of how to deal with your financial turmoil.

How do Debt Agreements work?

Debt Agreements apply to debts which are unsecured such as personal loans, tax debt, credit cards, power bills, school fees, and any other unsecured debt. With a debt agreement, we work out how much you can afford to pay towards these unsecured debts. The affordability is worked out based on your income and living expenses. The purpose of this assessment is to make sure you do not enter into any further agreement which is not affordable and will cause any further financial turmoil.  You may be eligible for a debt agreement if you apply to the following:

• Are insolvent (unable to pay your bills on time)
• Have unsecured debts, assets and income below certain statutory limits
• Have not been bankrupt or entered into a debt agreement in the last 10 years

What is the Debt Agreement process?

A Debt Agreement administrator will assess your financial situation by looking at your current income and expenses in order to help determine a repayment figure that will be affordable to you but also acceptable to your creditors.  Your creditors will then have the ability to either accept or decline your debt agreement proposal.  Although it is important for the debt agreement to be of a reasonable amount, if you are genuinely in financial hardship, your creditors may agree to receive less than what they would normally expect to receive. In our experience most creditors expect to receive about 60 cents in the dollar (i.e. 60% of their debt).

If your Debt Agreement proposal is accepted, it will become legally binding. Once accepted you will need to make the agreed payments to your debt agreement administrator. Your administrator will collect the payments from you and will then distribute them (less their fee) to your creditors on a regular basis (usually every quarter).  As long as you meet the terms of the agreement, your unsecured creditors cannot take any further action against you (i.e. force you into bankruptcy or garnishee your income).

If you are wondering whether a Debt Agreement suits your needs, please contact the Debt Agreement Advice Centre for a FREE initial consultation on 1800 653 485.

If you have entered into a debt agreement and your circumstances have changed and you can no longer afford to pay your payments, then don’t worry, you can choose from the following options:

• Vary your debt agreement; or
• Terminate your agreement.

Varying your debt agreement.

If you cannot afford to pay your debt agreement payments but you still want to continue with the agreement, you may consider a variation proposal. This option is appropriate if your circumstances have changed which now prevent you from paying the agreed payments. Some circumstances include:

• Losing your job.
• A drastic increase in living or household expenses.
• Having an additional dependant or family member to support.

You will need to provide evidence of your changed circumstances to your administrator before your administrator will be able to put forward a variation proposal to your creditors.  Your creditors will then have the opportunity to vote on your variation proposal.

If your creditors don’t accept your variation proposal, the terms of the original debt agreement will remain in place, so you may need to consider a termination of your proposal.

Termination of your agreement

If you are not eligible for a variation or your variation proposal was not successful then you will need to apply for a termination of your agreement. Your administrator will be able to prepare the necessary forms to initiate a termination of your agreement.  Once your debt agreement is terminated all of your unsecured debts (with interest) will be re-instated so you may then need to consider filing for bankruptcy.

At the Debt Agreement Advice Centre, we can help with you with a variation or termination of your debt agreement even if your debt agreement is being handled by another company.

Call our friendly and helpful advisors on 1800 653 485.

Bankruptcy can have many consequences but for most, the thought of eliminating financial burden can help overcome the stressful situation. Understanding bankruptcy and its impacts are essential when it comes to making correct choices for your future.
Myth 1. You can’t travel whilst bankrupt

Many people think being bankrupt blacklists you from traveling overseas. A bankruptcy trustee should let you travel overseas, as long as you have fulfilled all tasks you have been asked to do by your trustee and you have paid any compulsory income contributions. Your bankruptcy trustee will most likely ask for information such as how you are paying for the trip, your dates of travel and your travel destination. You do not need permission to travel within Australia.

Myth 2. Bankruptcy is expensive

Declaring bankruptcy through the government trustee is free unless you have to pay compulsory income contributions or you have assets which need to be sold.

Myth 3. You’ll lose everything in bankruptcy

Bankruptcy does not mean you lose everything. While owning assets, your trustee may need to sell them to pay your debts. In most cases, people can keep personal assets they own such as:

• Household furniture, appliances and sentimental items
• cash and bank account balances to cover daily living expenses (as long as it doesn’t exceed approximately $2,000)
• Motor vehicles to the value of $7,700
• Tools to the value of $3,750
• Superannuation, unless irregular contributions were made before bankruptcy to protect funds

We have over 10 years of experience in helping Australians overcome bankruptcy. If you would like to see how we can help you, please call our friendly Debt Agreement consultants at the Debt Agreement Advice Centre for expert advice debt consultants for expert advice on 1800 653 485 (toll-free).

Understanding your Debt Agreement

How do I find my Debt Agreement outcome?

After your Debt Agreement proposal has been submitted to Australian Financial Security Authority (AFSA), your creditors will have 20 business days to vote on it.  AFSA are responsible for sending out your proposal to all of your creditor and they will also collate the results. AFSA will then notify you by written notification of the outcome.

What happens after my Debt Agreement is accepted?

After your Debt Agreement has been accepted by your creditors, you will be bound by the terms contained within your Debt Agreement proposal.

What this means:

• All payments to your creditors will be managed by your Debt Agreement Administrator;
• All creditors who are listed in your Debt Agreement proposal, will receive a dividend from your Debt Agreement Administrator (on your behalf);

• Your Debt Agreement Administrator will advise your creditors of your Debt Agreement start date and your AFSA administration number.

• Your Debt Agreement Administrator will handle all enquires from your creditors;
• Interest on your debts will be frozen at the time your Debt Agreement proposal is accepted by your creditors.
• You other assets (such as a house or case) will be protected whilst you are in a Debt Agreement and you continue to make your contractual payments. If you do not keep up with repayments to creditors, they may be able to repossess assets which are secured (Such as your house or car).

When does my Debt Agreement end?

The length of your Debt Agreement will vary depending on several factors (including the level of your debt, your income and your household expenses). A Registered Debt Agreement Administrator will help you tailor a Debt Agreement proposal to suite your circumstances.

At the Debt Agreement Advice Centre we focus on helping Australians to set up affordable and sustainable Debt Agreements to help you get out of debt.

If you need professional assistance in creating a proposal, then please contact the experts for a FREE initial consultation on our toll-free hotline – 1800 653 485.

Although the end of your debt agreement may seem like a long time away, it will come to an end soon. When the day comes it will mark the beginning of your journey back to repairing your credit and getting control of your personal finances again.

When your debt agreement comes to an end, it will release you from all your unsecured debts (credit cards, personal loans, utilities) that you once had. It’s important to remember that you will not be released from any HECS/HELPS debt so you will need to pay these. Successfully completing your debt agreement is the first great place to start getting your personal finances back on track, so you do not end up in the same financial position. By now you should have learned to live within your means and you should have stuck to the budget you agreed with your debt agreement administrator.

Your credit file will be cleared after 5 years, but remember one will still be able to see it on the National Personal Insolvency Index (NPII), but the good news is that not many people search the NPII.

If you would like to find out more about what happens after completing your debt agreement, contact Debt Agreement Advice Centre. We have years of experience in helping Australians enter into a Debt Agreement and work out the best solutions. If you would like to see how we can help you, please call our friendly Debt Agreement consultants at DAAC for expert advice debt consultants for expert advice on 1800 653 485 (toll-free).

There are many different options you can pick when it comes to servicing your own personal debts. Individuals are often conflicted in whether or not they should enter into a debt agreement or declare bankruptcy. There are some important things you should know to help guide your decision.

Bankruptcy is primarily chosen when you have a large number of unmanageable debts that you cannot service. Declaring bankruptcy can potentially result in the selling of some of your assets (home). However, if you still have a job that provides you with a stable stream of income, a debt agreement can be a more suitable alternative, as it is an agreement for you to pay a percentage of your total debts.

Furthermore, when you set up a debt agreement you will pledge a specific amount (which will be based on what you can afford). In comparison to Bankruptcy you will lose any assets over the protected values and you will be subject to a yearly income contribution assessment which means you may need to pay compulsory contributions from your salary into your estate.

In order to choose a debt agreement, there are certain limits of income and debt that need to be met. It is best to consult with one of our professionals today at the Debt Agreement Advice Centre as these thresholds change every six months. We have years of experience in helping Australians setting up and completing debt agreements. If you would like to find out more information and see how we can help you, please call our friendly debt agreement consultants at DAAC for expert advice debt consultants for expert advice on 1800 653 485 (toll-free).

Some of the biggest fears of filing for bankruptcy can be the fact that you may be left with nothing and a lack of security and safety. There are some major benefits to entering into a Debt Agreement which can mean your most needed assets will remain safe.

Keeping Your House
An advantage of a Debt Agreement is that you will be able to keep your house as long as long as you disclose it to your creditors when you set up your Debt Agreement and you comply with the terms of your Debt Agreement.

Keeping Your Car
Entering into a Debt Agreement will not mean that you will have to sell your car. If you want to keep your car all you need to do is to simply keep paying the lease payments in the ordinary course. If you own a car outright then you will be able to keep it.

Keeping Leased Assets
If you have negative equity in the lease at the time that you enter into the Debt Agreement, the leasing company would be entitled to claim for dividends from your Debt Agreement for the “estimated shortfall”. This may affect the estimated dividend to your unsecured creditors.
One of the major advantages of entering into a Debt Agreement compared to bankruptcy is the protection against any legal action or proceeding your unsecured creditors may wish to take. Your unsecured creditors will be prevented from filing bankruptcy proceedings against you or obtaining any type of writ against your assets. Given that you fully comply with the terms and conditions of your Debt Agreement (i.e. you make the payments as required) you will be legally protected.
 
At Debt Agreement Advice Centre, we have years of experience in helping Australians enter into a Debt Agreement and protect assets such as their house. If you would like to find out more information and see how we can help you, please call our friendly Debt Agreement consultants at DAAC for expert advice debt consultants for expert advice on 1800 653 485 (toll-free).

To enter into a Debt Agreement, you need to propose a payment plan to your creditors. Your creditors then have a choice to accept or reject your proposal. There is no guarantee that your creditors will accept it.

So what happens if my debt agreement is rejected?

If your debt agreement is rejected, your creditors are free to pursue you for your debts.

Your Debt Agreement Administrator will get into contact with your creditors to identify the reasons why and if they are open for a resubmission.

If so, then you will be able to submit a new application that they may consider following their feedback.

Another crucial note that you should know is that Debt Agreements are governed by the Bankruptcy Act and so submitting a proposal and committing an Act of Bankruptcy.

After rejecting your application, your creditors can then use your proposal to apply to the court to make you bankrupt.

This is why it is important to seek professional advice to determine whether a Debt Agreement is the best option for you and how to create a proposal that your creditors will most likely accept.

At Debt Agreement Advice Centre, we focus on helping Australians create and proposal Debt Agreements, so we have really cultivated our knowledge, skills and experience in this area.

If you are wondering whether a Debt Agreement suits your needs or need professional assistance in creating a proposal, then please contact the experts for a FREE initial consultation on our toll-free hotline – 1800 653 485.

Can I Keep My Car If I Enter into a Debt Agreement?

When you enter into a Debt Agreement, it does not automatically mean that you will have to sell your car, depending on your situation.

What if I own my car outright?

As long as you disclose the true value of your car in the Debt Agreement Proposal, then you will be able to keep your car when you enter into a Debt Agreement.

What if my car is leased?

If your car is under finance and is leased, then it will depend on your leasing company. However, most leasing companies allow you to keep your car as long as you keep up to date with the lease payments.

However, if you are unable to sustain your payments, then the leasing company will repossess the car.

What if I want to sell my car while in a Debt Agreement?

If you wish to sell your car while being in a Debt Agreement, you are free to do so.

However, if your car is leased, it is unlikely that you will be able to lease another car until the Debt Agreement is successfully completed.

Will a Debt Agreement protect my car?

One of the major advantages of entering into a Debt Agreement and granted that you fully comply with the terms, is that your creditors will be unable to take any further recovery action against you, meaning that your car is protected.

How it compares to Bankruptcy

In comparison to Bankruptcy, a Debt Agreement increases your likelihood that you will be able to keep your car. In Bankruptcy, you will only be allowed to keep your car if it is valued at less than $7,800. If it is worth more than this, then you will need to surrender your car to your Bankruptcy Trustee who will sell it and give you back the protected $7,800. Anything made over this amount will be kept by the Trustee for the benefit of your creditors.

If you would like to learn more about Debt Agreements and whether it is the right solution for you, please contact DAAC on 1800 653 485. Our friendly and professional consultants will give your FREE expert advice customised to your situation. We operate a toll-free, 27/hotline so there will always be someone on the other end to speak to you.