If there is one thing that we have learned over our years of helping people manage their debts, it is that everyone’s situation is different. Not only do people struggle with different levels of debt, but they also have different levels of income, assets, and individual priorities in life. A solution that is ideal for one person is not always going to work for another, so it is important to know exactly what each of your options are able to do for you before you decide which is right for you.
A Debt Agreement is an alternative to Bankruptcy, so, when deciding whether or not it is better than Bankruptcy, you need to know the differences between the two and how they may apply to you. A simple place to start is to ask yourself the question: why do I want to avoid Bankruptcy?
To save your assets: This is the most common reason for wanting to avoid bankruptcy, because you have something, usually a house, or maybe a car, that you do not want to lose. Under a Debt Agreement your assets are not sold, so the only way that you would lose them is if they were still under finance and you did not pay them off.
To avoid the stigma: Declaring bankruptcy has a social stigma attached to it that many people desperately want to avoid. If you cringe at the idea of not paying back your debts, but are unable to pay them back in full, a Debt Agreement allows you to pay back as much as you can afford. And whilst it is governed by the Bankruptcy Act, you will not be a bankrupt person.
You want to be able to travel: Under a Debt Agreement you are free to keep your passport and to travel, whereas under Bankruptcy, you would need your Trustee’s permission before leaving the country.
To save your job: For some people, declaring bankruptcy would result in losing their job. It is possible that you could enter into a Debt Agreement instead, however, there are still some positions and licenses that can be affected by a Debt Agreement. It is vital that you discuss the matter with your HR department and/or licensing authority if there is a possibility that your employment could be affected by a formal debt arrangement.
To keep your credit rating intact: Unfortunately, at this point in time, there is a default placed on your credit file that lasts for a period of at least five years (unless if the agreement runs longer than five years)s after you lodge a Debt Agreement Proposal.
As you can see, there are indeed many benefits to entering into a Debt Agreement as opposed to declaring yourself bankrupt. Before making the choice, however, you should seek advice from someone who deals in all aspects of personal insolvency, so that you can be assured that they are giving you the best advice and not just trying to keep your business. At Debt Agreement Advice we are fully licensed to help you with a Debt Agreement, or a Personal Insolvency Agreement, or even Bankruptcy. So if a Debt Agreement is not actually going to be better than Bankruptcy for you, you can trust that we will tell you. Call us on 1800 653 485 for impartial advice on your debt relief options.
