Are your personal debts piling up? Are you starting to lose sleep over your financial situation? Then it may be time to start looking for debt relief solutions.
One debt relief solution that you may be eligible for is a Debt Agreement. A Debt Agreement is an arrangement that you enter into with your creditors in which you agree to pay a proposed sum to settle your unsecured debts over a certain period of time.
However, in order for this debt relief solution to work, the majority of your creditors need to agree to your arrangement. Once it is accepted, it becomes legally binding on all creditors and interest is frozen.
Are you eligible for a Debt Agreement?
Not everyone can enter into a Debt Agreement. You will have to meet certain requirements in order for it to be a viable debt relief solution for you.
Firstly, you need to be insolvent, meaning you are “unable to pay your debts as and when they fall due”. If you are able to pay your debts, but are using credit to do so, then you are most likely insolvent.
In addition, you cannot be bankrupt, or have proposed or entered into a Personal Insolvency or Debt Agreement in the past decade.
You also have to fall under the income, asset and debt thresholds. Currently, the income threshold stands at $113,304 (before tax) or $81,121.95 (after tax). The unsecured debt/equity in assets threshold is $108,162.00.
If you meet these requirements, then a Debt Agreement may be an applicable debt relief solution for you.
When should a Debt Agreement be my debt relief solution choice?
If you are falling behind on your repayments, then you are most likely ready to be exploring your options. A Debt Agreement is better than some other solutions, such as bankruptcy, as it still gives you control over some of your assets and finances.
For example, compared to bankruptcy, a Debt Agreement lets you keep your assets, depending on your situation. It also means that you can control your finances yourself, without having to report to a Bankruptcy Trustee.
A Debt Agreement is also a great choice for those who wish to remain acting as a company director. You will still be able to maintain this position, even if you have entered into a Debt Agreement.
Another great advantage of a Debt Agreement is that you are able to travel in and out of Australia as you please. Unlike bankruptcy, you do not need to ask permission from your Trustee to travel overseas and are able to keep your passport.
A Debt Agreement is a great debt relief solution for those who are struggling to make payments as they fall due. If you would like to further explore a Debt Agreement as your debt relief solution, contact DAAC for expert advice on our 24-hour hotline – 1800 653 485.
