Can a Debt Agreement End Your Worries?
You wake up one morning with a feeling of dread. No matter how much you try, you can’t shake it and it follows you throughout your day. At work, on the drive home and when you’re out with friends. This is what it’s like to be overwhelmed by debt. Thousands of people feel like it every year and most of them do nothing.
To help people break free from serious debt the Commonwealth Government developed 2 major methods for people to use – debt agreements and bankruptcy. In many cases, a debt agreement is a preferable option because it allows you to avoid a lot of the penalties associated with going bankrupt and also gives your creditors a better return than they would get under a bankruptcy. So what then is a debt agreement and how does it work?
A debt agreement is a settlement under which all of your debts are consolidated into one regular repayment. The interest is frozen and the debt is reduced to an amount that you can afford to repay. As long as you offer more in your repayment plan than your lenders would receive under a bankruptcy, the proposal is usually accepted. Different lenders have different policies however, and a debt administrator can talk you through what would happen in your situation.
So what does all this do for you? It gets you out of debt, fast and permanently. Once you’re in the debt agreement, your lenders can no longer contact you to chase you for money. You only make one regular payment with your administrator and as described, it’s based on a figure you can afford rather than one that debt collectors insist on.
So, is there a downside? Some restrictions do apply for a period of time. The debt agreement is marked on the NPII and your credit file, which stops you from getting into further debt at least until the original debt has been paid back. You’ll usually be able to borrow from 2nd tier lenders once the debt has been repaid and 7 years after your debt agreement is approved, it’s removed from your credit file, so you can refinance those debts with a major bank at that time. It’s also important to keep in mind that if you’re in debt stress, you may find it difficult to get a consolidation loan in the current environment.
Given this, a debt agreement can be an
excellent way out of debt if you’re in real difficulty. So don’t keep fighting. If you’re falling behind and feeling that stubborn sense of dread about your debts, look into a debt agreement to see if it can help you move on with your life.
Looking to find an established and reliable Debt Agreement partner? Then visit www.debt-agreement.net.au to find the best advice on gettingout of debt.
Eight Steps For Getting Out of Debt Today
When your debts have become too steep to deal with, you need a plan to get out. The 8 steps covered in this article are tried and true ways of doing just that.
1. Get Familiar With the Main Debt Relief Methods: It’s important you know about Debt Agreements, Bankruptcy, Consolidation Loans and Hardship assistance, because you may need to use one of these options to get out of debt. They all have different pros and cons. For instance, a debt agreement helps you get out of serious debt problems whilst not incurring many of the penalties of a bankruptcy. However, it’s not an option if you have significant equity in a home. A bankruptcy is a great last resort, but is not suitable if you need to travel overseas in the short term or want to work in certain professions. Hardship assistance is great if you just need short term relief but wont’ be able to help you if your difficulties are more long term. It can be tricky sorting through the pros and cons of these different options so it’s a good idea to speak with a debt expert to help you clarify what would be best for you.
2. Snowball your debts. This means paying them in order from smallest to largest. Tackling it this way means you pay off more debts, more quickly and this will give you confidence and motivation to deal with the larger debts.
3. Use a budget. This will allow you to see exactly where you have money going out and coming in so you can plug some of those more expensive holes. You might be surprised by what a budget reveals – it’ll often show you’re spending more than you thought you were.
4. Be a swapper. Look through your expenses and see where you can swap an expensive option for a cheaper version. Supermarket label food instead of branded, a barber cut instead of the salon, cheap movie theatres instead the more expensive ones. By swapping, you’re saving money with necessarily depriving yourself completely. This makes your budget more realistic and achievable, meaning you’re more likely to make it work. That said, there are some areas in your life where you may just have to cut out an expense completely to help stay financially afloat.
5. Speak with your lenders. When times are tough financially, consider calling your lenders and work out a temporary repayment plan that works for both of you. Any hardship assistance will likely be short term, but that should allow you to get back on your feet if you’re problems are not too severe.
6. Hold a garage sale. Bring in some much needed cash by selling those things you don’t really need or trading them in to second hand retailers who buy from the public.
7. Pay in cash. Only buy what you can afford to pay for with cash. If you need to buy it on credit, it’s not affordable and you should hold off buying it until you are able to pay in cash.
8. Try another bank. In all likelihood, whatever offer you’re receiving from you present lender, there’s probably another lender out there that could offer you a better deal. So feel free to shop around and long at what offers are out there. Consider interest rates, fees, switching costs and other features of the loan being discussed and being careful to distinguish between attractive introductory offers and genuine long term value. It’s the latter that will really save you dollars.
Although debt problems are stressful, there’s always a way out. Keep these 8 steps in mind and you’ll be well on the road to finding that way and breaking free from debt for good.
Looking to find the best way out of debt? Visit www.debt-agreement.net.au to find the best advice on debt agreementsand other debt relief options.
5 Escapes From Debt
When you’re struggling with debt, you have 5 main methods you can use to turn your life around. These include a debt consolidation loan, an informal arrangement, a debt agreement, a bankruptcy or…trying to carry on as normal. So, which one is best for you? It all depends on how serious your debt problems are.
To draw from some weather terminology, say they’re at category one. You have a clean credit history and enough money to pay your bills, but the multiple payments and the high interest rate are causing some turbulence. In a position like this, look at a consolidation loan to give yourself one payment each month and a more favourable interest rate.
By category 2, things are starting to deteriorate. You may have been laid off or been hit by a sudden financial emergency such as medical operation or essential purchase that has resulted in you being unable to meet your payments for a while. When you’re dealing with this situation, try to enter an informal arrangement with your creditors. Depending on your financial position, your bank may let allow you to make lower repayments for a while until your finances are back under control. The relief they give is not usually long term however.
At category three, the rails are beginning to come off and you need to act to save yourself financially. Your debts have usually spiralled out of control and you may have defaults or insufficient income to get a consolidation loan to cover your debts. An informal arrangement isn’t really an option, because the problem won’t be any easier in 3-6 months time. In a situation like this, you should really consider a debt agreement. In a debt agreement, your creditors are offered a reduced repayment (often 50% – 80% of the debt back with no interest). When a fair offer is made, the agreement is regularly accepted, providing the creditors are receiving more than they would under a bankruptcy. It’s important you discuss your situation with a debt administrator however, to ensure you would be eligible, as a range of conditions apply.
By category 4, repayment plans are not an option. You may be unemployed for the foreseeable future or the debts may have become too large to ever pay back. In this situation, you should think about a bankruptcy. All your debts will be cleared and you’ll be able to begin again. However, certain conditions apply, so be sure to get some expert advice before you go ahead with it.
Lastly, you could choose to do nothing. When you’re in serious debt however, this is rarely the best option. If you fall behind your payments for long enough, your creditors can launch legal action against you so it’s important to be proactive.
Lastly, you could just keep going as you are. When you’re in serious debt trouble though, this is not usually the best option and it’s important to know that if you fall behind on your payments for long enough, your creditors can take court action to recover their debts, living you in an even more difficult position.
Whilst this article introduces the main strategies you can use to repay your debts, the option that’s right for you will depend on your situation – the size of your debts, your income, your assets and your monthly expenses. So as always, seek advice from a debt professional and then decide on the best approach for you.
Looking to eliminate debts with a Debt Agreement, then visit www.debt-agreement.net.au to find the best advice on gettingout of debt.
Which Debts Can You Wipe Out Using a Debt Agreement?
Thousands of people struggling with debt enter into a debt agreement every year to finally break free. In this arrangement, your debts are re-negotiated into a smaller, more affordable amount and you repay your debt in manageable instalments over the next 2 to 4 years. It’s a repayment option that was created by the Federal Government to help peope repay debts that have otherwise become unmanageable. However, not all debts are able to be included in a debt agreement, so here, we’ll cover what you can put in.
In short, a debt agreement can help you repay your ‘unsecured debt’. Unsecured debt is debt that is not borrowed against a specific piece of property. In contrast to a home loan or most car loans, where those assets will be seized if you fall behind on the repayments, in the case of an unsecured asset there’s no specific asset that can be taken. For instance, if you fall behind on your credit card, they can’t come and take your fridge – even if you bought it with that credit card because credit card debt is unsecured. If you get sent bankrupt of course, some of your assets can be taken, but this is usually limited to houses, cars or any unusually valuable possessions. Normal household items are usually okay to keep.
In a debt agreement, nearly all unsecured debts can be included. This covers personal loans, credit cards, tax, tuition fees, store credit and more. Some unsecured debts, such as child support costs, fines and certain government debts can’t be included – these debts need to be repaid as normal, separately from the debt agreement.
A damaged credit history does not affect your ability to enter a debt agreement and for this reason, thousands of people each year use the arrangement to make their debts more manageable and stave off bankruptcy.
On that matter, it’s a good idea to check your credit file to see whether or not you have defaults, because if you do, that will most likely rule you out of being able to access a personal loan to consolidate your debts.
To ensure the whole process is carried out correctly, you should to engage a licensed Debt Agreement administrator to assist in setting up your debt agreement.
Want to find out more about aDebt Agreement, then visit Graham McDermott’s Debt Agreement Administrator website.