A Debt Agreement is a debt relief option for people who cannot afford to pay their debts in full, but it does not get you out of paying them entirely. It is a payment arrangement, which becomes legally binding on all parties once it is accepted, and generally speaking you will pay the amount of the debt with no interest or, in some cases, maybe even a little bit less than what you owe. If you are completely unable to pay anything back toward your debts, your only option would be Bankruptcy.
Even in Bankruptcy, though, it is never certain that you will not pay back your debts. Bankruptcy does not wipe all of your debts out straight away, rather, it sort of places them on a shelf for the time that you are bankrupt (which is usually three years). You will stop making payments towards the debts, but if there is any way that your Trustee in Bankruptcy can get any money out of you during that time, they are bound to do so. And so the Trustee will look very closely at your income and assets; if you earn over a certain amount, you will be asked to make some repayments, and if you have any assets with equity in them, they will be sold.
There are many Australians with unmanageable debt who stand to lose their home, or maybe their job, if they declare themselves bankrupt, and it is for these people that a Debt Agreement was designed. It gives you protection under the Bankruptcy Act and a foreseeable end to your debt, but without some of the harsh consequences that come with Bankruptcy. So whilst a Debt Agreement involves paying more than if you were to declare Bankruptcy it is, for many people, a much more desirable and suitable option.
If you are no longer able to pay your debts, speak to a professional adviser who knows the ins and outs of both Bankruptcy and Debt Agreements before making a decision as to what to do. The staff at the Debt Agreement Advice Centre will assess all aspects of your financial situation and work with you to come to a decision as to what would be best for you. It may be that you could declare full Bankruptcy without too many adverse affects – or it could have undesirable consequences for you that could be avoided by entering into a Debt Agreement instead. Call us today on 1800 653 485 for free and impartial advice.
