Here at the Debt Agreement Advice Centre we are confident that we can help you in some way, shape or form to become free of unmanageable debt. A question that we are often asked when people call us for debt relief is: “How does it work?”
First of all, it is important to understand that you will have different options to manage your debt depending on what sort of debt it is. There are some things which simply need to be paid, including goods and services, such as utility bills, and certain fines. If these were the only sort of debts that you were struggling with, we would most likely refer you to a financial counsellor or budgeting service.
Another type of debt that really should be paid in full is a secured debt, meaning that there is some form as asset, such as a home or a vehicle, that is acting as security for it. If you were to not pay a secured debt in full, the finance company would be able to sell that asset in order to recoup on their loss. The thing with secured debts is that they are generally affordable when you first take them out – otherwise you would not have been approved! Usually it is the accumulation of other debts, or a change in circumstances, that causes you to struggle with secured debt.
The other type of debt that you might have, and the one that usually causes people the most trouble, is unsecured debt, which usually takes the form of a credit card, store card, or personal loan. An unsecured debt has no asset attached to it which could be sold if you didn’t pay it, which means that whilst it is the most troublesome, it is also the easiest to try to deal with. And for many people, taking care of their unsecured debts makes meeting their other commitments a lot easier.
So how does it work?
Unsecured debts can be settled with a Debt Agreement. A Debt Agreement is a legally binding arrangement that is governed by the Bankruptcy Act which allows you, if the majority of your creditors agree to it, to settle your debts for an amount that is less than what is owed, and with no more interest. A Registered Debt Agreement Administrator will begin by working out what you can reasonably afford to pay your unsecured creditors after you have paid for food, rent/mortgage, bills, and other living expenses. This amount, after fees and government charges have been paid, will be paid proportionately to your creditors in lieu of your regular repayments. When your agreement is accepted your creditors are forced to freeze your debts, and every one of them is paid the same percentage of their total debt. Once you have made all of your payments and completed your agreement, you are legally released from those debts.
No matter what sort of debt you are struggling with, you should call us for advice. Debt Agreements are our speciality, but we can also help you to find solutions that you might not have considered, offer you another type of agreement known as a Personal Insolvency Agreement, or even give you advice about Bankruptcy. The first step to getting back in control of your finances is to seek professional help, so call us now on 1800 653 485.
