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Read how a Debt Free helped Paul with a Debt Agreement..

Paul is a single man employed as an Interior Decorator who was struggling with his personal loan and credit card for more than 12 months. Paul was earning just under $50,000 per annum. Paul’s troubles began when he lost his job due to a drink driving charge. He was then forced to give up his current employment and found local employment.

Whilst Paul was unemployed his debts kept mounting up as he could not pay them as they fall due. Some creditors lodged defaults on his credit record and one creditor threatened legal action.

Paul was struggling to keep up with all his payments, including his secured car loan repayments. He called Debt Free when Esanda had repossessed his car. Paul’s accounts fell into arrears as he did not even have the money to keep up even the minimum monthly payments. His debts totaled $39,683.00 and his minimum monthly payments were $1,737.72 per month or $404.12 per week.

Get Debt Free did a free debt assessment for Paul and prepared a budget which Paul felt he could afford.  After that Debt Free then prepared a Debt Agreement Proposal which included a weekly contribution into his Debt Agreement of $150 per week.  

This represented a saving on the minimum monthly payments of preparation of $254 per week. Paul agreed to pay this weekly amount for 260 weeks (5 years).  The creditors accepted his Debt Agreement proposal and Paul was delighted.  Paul’s creditors will receive a dividend of approximately 70  cents in the dollar over 5 years.  

This Debt Agreement proposal provided creditors with a better return than what they would have received if Paul had been forced into bankruptcy.  Once Paul has paid his 260 payments of $150, his debts will be fully satisfied and the 30 cents in the dollar will be fully written off.

If you would like to find out how a Debt Agreement proposal could be tailored for you please contact us today on our toll free line on 1800 9810 70 or apply online for free debt assessment.

Once you have made your final contribution towards your Debt Agreement you will become free from all obligations that were the subject of your Debt Agreement. In other words all debts that were disclosed in your Debt Agreement proposal will be finalised and settled in full. This means you will be able to live free again without the burden of debt.

A Registered Debt Agreement Administrator is an individual or a company that is registered and regulated by the Insolvency Trustee Service Australia (ITSA) to assist individuals to set up and supervise debt agreements in Australia. Choosing a Registered Debt Agreement Administrator (RDAA) to set up a debt agreement in Australia is absolutely critical.  ITSA has a list of Registered Debt Agreement Administrators published on its web site.

Debt Free has been officially registered with ITSA since the 1st of July 2007 when the formal registration process was initially introduced. Given Debt Free was registered from the beginning, you can be assured if you choose us you will be dealing with a reputable and experienced Registered Debt Agreement Administrator. In fact our company is a little different to most other debt agreement companies. Our Managing Director is a Chartered Accountant and a Registered Trustee in Bankruptcy. This means you would be dealing with a company which is owned and operated by a managing director who is fully qualified in the personal insolvency profession.  Many other RDAAs are not Registered Trustees in Bankruptcy which means they do not hold the full personal insolvency licence with ITSA. Worse still dealing with an unregistered administrator could cost you more money in the run long as they typically charge money up front and then they simply refer your case to a RDAA at some later stage.  That means any money paid to the unregistered administrator would be wasted and the time your case was with them would also be wasted.

To make sure you are dealing with the appropriate person or company to assist you to set up a debt agreement make sure you ask the following questions:

•           are you a Registered Debt Agreement Administrator licensed by ITSA?

•           are you regularly inspected by the ITSA?

•           What qualification do you have?

After you ask these questions, you will only then be able to establish if you are dealing with a properly registered company.

To see if a person or company is registered with ITSA click here

Here we take a look at the advantages as well as the disadvantages of a debt agreement. We will always disclose to you the truth about a Debt Agreement.  Whilst they have tremendous advantages for those people who are eligible, you also need to consider and understand the disadvantages of a debt agreement. For more information you can always call and discuss advantages and disadvantages of a debt agreement with our debt consultants.  Our consultants are highly trained debt specialists. Call us today on 1800 98 10 70

Advantages

• All current or pending legal action against you will be frozen as soon as your proposal is accepted for processing by ITSA. Even future legal action from your existing creditors will be frozen as soon as your proposal has been accepted by ITSA for processing. This freeze will remain in place as long as your proposal is accepted by your creditors.
• Secured creditors are unaffected by the agreement so you can keep any leased assets (ie your car) and also keep your house as long as full disclosure is made.
• A debt agreement follows the concept of debt consolidation, ie  a debt agreement (once approved by your creditors) bundles all the existing debt and becomes payable over the course of the debt agreement by the agreed installments.  The agreed installments are paid to the appointed debt agreement administrator. The benefits of this are similar to the benefits of debt consolidation
• Many of the restrictions placed on you by bankruptcy, such as restrictions on travel and the ability to retain or acquire property, do not apply to debt agreements.

Disadvantages

• Some of your personal details, including your name, will be recorded on the National Personal Insolvency index, known as the NPII. These records are recorded indefinitely. These details are available to anyone who can access the NPII after paying a fee.
• Your credit rating will be affected, with your name and some details being recorded on consumer credit databases. This means that you may have some difficulty in obtaining a loan, however, we find that once you have successfully completed your debt agreement you should be able to obtain a loan (subject to lending criteria).

If you are struggling with unsecured debt, we believe that the advantages of a debt agreement outweigh the disadvantages. Consult with our expert debt consultants today.

This article answers a lot of common questions about debt agreements.

At Get Debt Free, we are often asked many similar questions about debt agreements and how they can help people get out of debt. We wanted to provide a little more information to our visitors of this site to help them get a basic understanding of how debt agreements work in Australia. For more info on this subject, view our debt agreements page.

Please keep in mind that applying for a debt agreement is a complicated process based on individual circumstances so we can only provide general information here. The best option is to discuss a debt agreement with our debt consultants who are personal debt specialists. We offer free advice that is tailored to individual circumstances. You can call us on 1800 98 10 70. In the meantime, please read on to learn a little more about debt agreements.

What is a Debt Agreement?

A Debt Agreement is a legally binding, flexible agreement made between your creditors as an alternative option to bankruptcy.

A debtor will negotiate with their creditors, usually through a Registered Debt Agreement Administrator (RDAA), to settle their debts. Usually this is for less than what the debtor owes the creditors.  Once approved by creditors the agreement becomes legally binding under Australian Law on all parties.

Who can enter a Debt Agreement

There are some limitations as to who can enter into a debt agreement. These are:

• If you have been bankrupt or have entered into a previous debt agreement during the past ten years then you cannot enter into a debt agreement.
• Your income must be less than the current income level as published by ITSA and adjusted by CPI
• Your  outstanding or unsecured debts must be less than the current debt threshold as published by ITSA and adjusted by CPI
• Your property must be less than the current property threshold as published by ITSA and adjusted by CPI
• You must be personally insolvent

If you are unsure how these conditions are applied please call today so we can assess your individual circumstances. Remember each debt agreement proposal is different and are all tailored to your financial circumstances. Call today on 1800 98 10 70 to see if we can help you discover your options. If your circumstances are different please call us as you may qualify for another product or service.

How does it Work?

If you feel you are eligible for a debt agreement it is best that you consult with a Registered Debt Agreement Administrator who are qualified to submit your proposal to ITSA for processing.  Personal Insolvency can be complicated and for that reason we recommend that you only deal with a qualified personal insolvency expert.  At Debt Free our debt consultants are trained and supervised by a Registered Trustee in Bankruptcy who is also a fully qualified Chartered Accountant.  Our debt consultants are highly experienced to handle all personal insolvency cases. Debt Free have been supervising debt agreements since 2006 and have helped hundred of Australians.

Once we have formulated your debt agreement proposal we will submit it for processing with ITSA.  After that Creditors will have approximately 35 days to votes on the proposal.  If it is accepted it will become a legally bound agreement.

We can help you work out a proposal that is both acceptable to you and your creditors.  We will make the entire process as simple as possible.

What if I break the Agreement?

The agreement is legally binding. If you do not honour the terms you agreed then creditors may terminate it, which may lead to bankruptcy.

Can I change a Debt Agreement?

If your circumstances change, you do have the option of putting forward variation to your debt agreement. These changes must go through the same voting process that the original debt agreement did. If accepted, these changes will then become legally binding to your creditors.

How is a Debt Agreement different to bankruptcy?

A debt agreement is an alternative debt solution to bankruptcy. For a debtor, it may be a preferable solution as it involves less restrictions being put in place, ie overseas travel and property ownership.

After declaring bankruptcy, a debtor will have restrictions placed on travel and ownership of property. A  debt agreement does not imposed these restrictions.

The Debt Agreement thresholds are indexed in accordance with the Consumer Price Index (CPI).

The Debt Agreement thresholds are currently:

• Unsecured creditors < $95,386.20; or
• Assets < $95,386.20; or
• Income < $71,539.65 (after tax) or approximately $96,731 (before tax for Australian residents)

If you exceed these limits you will be ineligible for a Debt Agreement and will need to consider a Personal Insolvency Agreement.

The statutory thesholds are maintained by ITSA.