We offer FREE  initial advice without obligation Call Us Now on 1800 98 10 70.

What are our alternative solutions if you have been refused a loan?

If you have been refused a consolidation loan due to a poor credit history or the financial institution does not believe you can service the loan and you cannot meet your other financial commitments (ie you are struggling with unmanageable levels of debt), you may wish to consider some other debt relief solutions:

• Debt Agreement
• Personal Insolvency Agreement
• Bankruptcy

What is Debt Consolidation?

Debt Consolidation is a financial product (usually a personal loan) whereby you roll old debts into a fresh loan, ie you combine many different debts into a single loan.

What are the benefits of a obtaining a loan to consolidate debt?

• One single loan repayment per month rather than many individual repayments
• Secure a lower rate of interest
• Shorten the total repayment period

Consolidating debts

• Credit cards
• Store cards
• Other personal loans

Who offers debt consolidation loans?

Typically these types of  loans are offered from major financial institution like the big 4 banks in Australia.  We also recommend that you shop around for the lowest interest rate and account keeping fees.  Remember to ask about the account keeping fees and the loan establishment fee as these can greatly affect the effective rate of interest. Not all financial institutions will offer these type of loans on an unsecured bases ( ie without security), so you may be asked to put up an asset as collateral (like a house or a car).

Will I qualify for a loan?

It is unlikely you would qualify for a loan if any of the following factors are present;

• You have a bad credit record; or
• You have been bankrupt in the last 10 years; or
• You are in default with other loan repayments
• You do not have regular employment.

If you have been refused a debt consolidation loan, you may wish to consider our debt solution services. Remember our advice is free and without obligation, so call us today toll free on 1800 98 10 70, you have nothing to lose!

• Assist with completing bankruptcy forms from $396
• Act as your Bankruptcy Trustee from $75 per week (subject to statutory charges & recoveries)

Call Us Today to discuss your personal bankruptcy needs on 1800 98 10 70.

Bankruptcy can provide significant relief to people with:

• unmanageable levels of debt;
• assets valued at less than the statutory thresholds; and
• income less than the statutory thresholds.

Our consultants can provide expert advice and advise you on your best available options to enjoy immediate relief from debt.

Declaring yourself bankrupt could be a life changing decision and accordingly we strongly recommend that you invest 10 minutes to read this web site. If you are uncertain about any aspect you can call us for free initial advice on 1800 98 10 70. All bankruptcy information and advice will be provided free of charge during your initial phone call.

1. Bankruptcy alternatives

If you wish to explore alternative bankruptcy options please review the pages below. We offer a financial assessment for $99 and that assessment will explore if you are eligible for any alternative solution . Our unique debt assessment will advise you of your best option and we will also explore if you can avoid bankruptcy, which may involve:

• a Debt Agreement or
• a Personal Insolvency Agreement

2. What is Bankruptcy?

Bankruptcy is a legal process for individuals who cannot pay their debts as they fall due. If you are unable to avoid bankruptcy, it will last for 3 years (if you fail to truthfully disclose your financial position and to fully co-operate with your Trustee in the form of a Statement of Affairs). At the end of your bankruptcy you will be released from the debts which you had incurred before you entered into Bankruptcy. You will not be released from debts which you may incur after you have been made bankrupt and some debts such as fines and child support survive your Bankruptcy (in other words you will not be released from these debts).

A Trustee will be appointed to handle and oversee the process. Your Trustee will sell all of your assets except for the following assets which are protected:

• Most ordinary but not luxury household and personal goods
• Motor Vehicle (worth < $7,050)*
• Tools of Trade (worth< $3,500)*
• Superannuation (subject to limits)

*amount current as at September 2011

Whilst you are a bankrupt, you may be subject to the following obligations/restrictions:

Your Bankruptcy term may be extended for up to eight years (if you fail to fully co-operate with your Trustee).

Bankruptcy should be looked upon as a last resort. Call Debt Free today to see if our highly qualified team can help you avoid bankruptcy with a more beneficial financial solution. The initial phone consultation is free but the results can be life changing!

3. Will I be liable for compulsory income contributions?

If you are made bankrupt you may be liable to make compulsory income contributions for the duration of your Bankruptcy (3 to 8 years).

Use our income contribution calculator to see if you will be liable for statutory income contributions.

Income Contribution Calculator

4. How long will my Bankruptcy last?

Usually you will be bankrupt for 3 years (assuming you have filed your Statement of Affairs). However, the period that you are bankrupt could be extended up to 5 years or in some extreme cases up to 8 years.

• Learn how the period you are bankrupt can be extended for up to 5 years;
• Learn how the period you are bankrupt can be extended for up to 8 years;

If you fail to lodge your Statement of Affairs with your Trustee you can be bankrupt indefinitely.

5. Can I end my Bankruptcy early?

Normally bankruptcy lasts for 3 years (assuming you fully co-operate with your Trustee and have fully disclosed your circumstances in your Statement of Affairs). If you wish to bring your bankruptcy to an end earlier you can put forward a proposal to your creditors. Any early termination proposal would need to put your creditors in a better position than they would be if your bankruptcy continued (in other words they will receive a higher dividend under your early termination proposal than if your bankruptcy ran its complete course).

6. Can I declare myself Bankrupt?

Yes but before you decide to declare yourself  bankrupt, you should first call us on our Toll Free phone line to see if you can avoid bankruptcy. If it is your only viable option we recommend that you first visit a financial counsellor. A list of counselling services available are listed on the Insolvency and Trustee Service Australia website.

7. How do I declare myself Bankrupt?

To become bankrupt will need to complete the necessary forms. These forms can be obtained from ITSA free of charge so you should never be charged to obtain them. Click here to download the forms. If you need help completing the forms, then we are happy to help by providing a personal service and help you complete the forms from as little as 4 payments of $99 each.

8. Can I appoint a Private Trustee of my choice?

Yes you can appoint a Private Trustee of your choice. Typically a Registered Trustee (in private practice) will charge a fee to act as the Trustee. Debt Free has a Registered Trustee who can offer this service subject to terms and conditions. Call us to discuss your circumstances so we can provide you with a cost estimate for this service.

9. Bankruptcy Forms

If you would like to download the bankruptcy forms FREE of charge. If you require help completing these forms we can provide that service from as little as 4 payments of $99 each or a single payment of $396.

As part of our service we will help you complete the forms and undertake a financial assessment to ensure that bankruptcy is your best option.  We will also provide a bankruptcy kit which explains bankruptcy in more detail and also details your obligations as a bankrupt so you do not fall into the bankruptcy trap and have your bankruptcy extended up to 5 or 8 years.

We can help you combine all unsecured debt into a formal repayment arrangement (subject to strict criteria and creditor approval).

Call Us Today to see you qualify.

Debt Agreement criteria:

The benefits of a Debt Agreement (herein after referred to as a “DA”) include:

• Affordable regular payments tailored to your budget;
• Unpaid debt will be legally written off (including interest);
• Binds all creditors into the agreement
• Fixed payment period usually from 3 to 5 years
• We deal with all creditor calls and correspondence;
• Avoids the stigma of formal bankruptcy – allowing you to enjoy the following benefits:
  • Freedom to travel overseas
  • Assets will be protected

A DA is ideal for insolvent debtors who have a poor credit record and cannot obtain a consolidation loan. A DA is a formal legally binding agreement with your creditors and is an act of bankruptcy under the Bankruptcy Act. As such it should not be confused as a consolidation loan.

Read our Frequently Asked Questions about a Debt Agreement.

Remember our advice is free and without obligation, so call us today toll free on 1800 98 10 70, you have nothing to lose!

What is a Debt Agreement?

A DA is a legally binding agreement with your creditors which must first be approved by them. Usually you pay an agreed regular sum for a period of 3 to 5 years and the interest on your debts is frozen at the time your agreement is accepted by your creditors. Your contributions are divided up between your creditors (less our fee which is approved by your creditors), who accept the sum in full and final settlement of the amount you owe them. In many cases this will be less than the total amount you currently owe and any difference will be written off. If you own your home or other assets you may choose to sell them or re-mortgage these assets and pay one lump sum in full and final settlement under your debt agreement.

Once your DA has been approved by your creditors, it will protect you against any further legal action which they may have been entitled to take against you, which may have resulted in your Bankruptcy.

So how much will I be required to pay under a Debt Agreement?

The regular payment you will make under your DA will depend on your income and expenditure. We will help you assess what you can comfortably afford to repay towards your DA. We will usually request that a direct debitl be set up to collect your agreed contribution under the DA.

What sorts of people enter into Debt Agreements?

A DA is suitable for anyone who has unsecured debts which they cannot repay as the debts fell due for payment. If you cannot pay your debts as they fall due, you are insolvent and the law gives you two alternatives – Bankruptcy or a DA. You cannot propose a DA if:

• you have been a Bankrupt or entered a DA within the last 10 years; or
• your unsecured debts exceed $94,530.80; or
• your assets that would be available under bankruptcy exceed $94,530.80; or
• your income for the next 12 months is expected to exceed $70,898.10 (after tax) or approximately $95,688 (before tax for Australian residents).

Are there any other options?

You can approach your creditors individually and ask them to reschedule your debts, but this may be difficult if you have a lot of creditors. Some banks and building societies have hardship assistance and we recommend that you approach them in the first instance before proposing a DA.

Bear in mind that unlike a DA, an informal arrangement offers no guarantees as one or more of your creditors could change their mind at a later date, or charge you higher rates of interest later.

What are the advantages of a Debt Agreement?

• We help you to calculate what you can afford to repay and you make just one payment into your Administrators’ DA account by a regular direct debit.
• Once your DA is approved, all of your creditors are legally bound by its terms, so as long as you keep paying your agreed sums you will be protected from any creditor enforcement action.
• Once the agreed term of your Debt Agreement is over (usually after 3 to 5 years) you will have no further obligations to your creditors. At this point you stop paying the regular sum, and can start afresh.
• Your employment will probably not be affected. In fact, your employers will not know about your DA unless you choose to tell them.

How to do apply for a Debt Agreement?

The first step is to call us on our toll free advice line or to apply on-line. We will take you through our Best Advice Model and will then advise you on the solution which best suits your financial circumstances. We recommend many solutions so we do not sell a DA to every caller! We will always give you free and impartial advice. After you have supplied us with all of the necessary information we will prepare your Debt Agreement Proposal for you. After you have signed your Debt Agreement Proposal we will lodge it with the Insolvency and Trustee Service Australia who will send it to your creditors for voting.

Your creditors will vote on your Debt Agreement Proposal by mail and you will not need to attend any meetings of creditors or speak to your creditors about the proposal. We will handle all negotiations with your creditors.

Will a Debt Agreement affect my credit rating?

Your Debt Agreement Proposal will be recorded on the National Personal Insolvency Index register (forever). This register is maintained by the Insolvency and Trustee Service Australia. Your name will also be recorded on a commercial credit reference database for 7 years, after which time it will be deleted. Your credit is likely to be effected after entering into a DA or you may be charged a higher rate of interest.

What else should I know before I apply for a Debt Agreement?

You might actually pay more under a DA compared to if you were made Bankrupt. This is because you may not need to make income contributions if you were made bankrupt. To enquire if you would be liable to make compulsory income contributions please complete the information on the Bankruptcy Income Calculator.

Will my home be safe in a Debt Agreement?

You will not usually have to sell your property if your creditors accept your Debt Agreement Proposal (but you may need to release some equity in the property). If you choose to keep your house, you will of course need to keep your mortgage repayments up to date. Your house mortgage stands outside your DA. If you were made bankrupt your Bankruptcy Trustee would need to take steps to sell the equity in the property, whether that be to your spouse or a third party.

What if my creditors don’t accept my proposal?

At least 50% of votes (in value) must be in favour of your Debt Agreement proposal.

If your creditors don’t vote in favour of your Debt Agreement Proposal you will still have the option of negotiating an informal arrangement with your creditors.

Who is Debt Free regulated by?

Our Debt Agreement Administrator is a qualified Chartered Accountants and is a member of the Institute of Chartered Accountants in Australia and the Insolvency Practitioners Association of Australia. The Insolvency and Trustee Service Australia also regularly inspects our operations to ensure strict compliance with the bankruptcy Act.

We can help you combine all unsecured debt into a formal repayment arrangement (subject to strict criteria and creditor approval).

Call Us Today to see you qualify.

Personal Insolvency Agreement criteria:

• You are considered insolvent (unable to pay your debts as and when they fall due); and
• Have unsecured debts more than > $94,530.80; or
• Have equity in assets more than > $94,530.80; or
• Regularly employed but annual income is more than > $70,898.10 or approximately > $95,688 (before tax for Australian residents)

The benefits of a PIA include:

• Affordable regular payments tailored to your budget;
• Unpaid debt will be legally written off (including interest);
• Binds all creditors into the agreement (once accepted);
• Fixed payment period usually from 3 to 5 years;
• We deal with all creditor calls and correspondence;
• Avoids the stigma of formal bankruptcy – allowing you to enjoy the following benefits:
  • Freedom to travel overseas
  • Assets will be protected

What is a Personal Insolvency Agreement?

A PIA is a legally binding agreement with your creditors which must first be approved by them. Usually a PIA is usually structured so you pay an agreed regular sum for a period of 3 to 5 years. The interest on your debts is frozen at the time your PIA is accepted by your creditors.

How does a Personal Insolvency Agreement work?

Your PIA will be established to assist you to regain control of your finances- it will be structured and developed to suit your particular circumstances. Your contributions are divided up between your creditors (less our fee which is approved by your creditors), who accept the sum in full and final settlement of the amount you owe them. In many cases this will be less than the total amount you currently owe and any difference will be written off if you complete your PIA. If you own your home or other assets you may choose to sell them or re-mortgage these assets and pay one lump sum in full and final settlement under your PIA.

Once you sign a 188 Authority (which commences the process for a PIA), your creditors will not be able to take any enforcement action against you whilst the PIA is kept up to date.

So how much will I be required to pay under a Personal Insolvency Agreement?

The regular payments you make under your PIA will depend on your income and expenditure and your assets and liability position. We will help you assess what you can comfortably afford to repay towards your PIA.

Is a Personal Insolvency Agreement (PIA) the same as a Part X agreement?

Yes – A PIA is administered under Part X of the Bankruptcy Act, so in truth a PIA can still be referred to as a Part X arrangement.

What sorts of people enter into Personal Insolvency Agreements?

Usually people who exceed the statutory thresholds for a Debt Agreement will apply for a PIA. If you exceed the following thresholds you will not be able to propose a Debt Agreement and will need to consider a PIA.

• Unsecured creditors more than $94,530.80; or
• Assets more than $94,530.80; or
• Income more than $70,898.10 (after tax) or approximately $95,688 (before tax for Australian residents)

Are there any other options apart from a Personal Insolvency Agreement?

You could approach your creditors individually and ask them to reschedule your debts, but this may be difficult if you have a lot of creditors. Some banks and building societies have hardship assistance and we recommend that you approach them in the first instance before proposing a PIA.

Bear in mind that unlike a PIA, an informal arrangement offers no guarantees as one or more of your creditors could change their mind at a later date, or charge you higher rates of interest.

What are the advantages of a Personal Insolvency Agreement?

• We help you to calculate what you can afford to repay and you make just one regular payment under your Personal Insolvency Agreement to your client account by a regular direct debit.
• Once your PIA is approved, all of your creditors are legally bound by its terms, so as long as you keep paying your agreed sums you will be protected from any creditor enforcement action.
• Once the agreed term of your PIA is over (usually after 3 to 5 years) you will have no further obligations to your creditors. At this point you will stop paying the regular sum, and you will then be on the road to financial freedom.
• Your employment will probably not be affected. In fact, your employer will not know about your PIA unless you choose to tell them.

What is the difference between a Debt Agreement and a Personal Insolvency Agreement?

• If you exceed the Debt Agreement Thresholds you cannot propose a Debt Agreement and can only propose a PIA if you wish to formally deal with your debts under the Bankruptcy Act.
• You must appoint a Controlling Trustee to initiate the process for a PIA. The 188 Authority is irrevocable and is an Act of Bankruptcy, which means if your proposal for a PIA your creditors will be able to rely upon the 188 Authority being executed in petitioning for your bankruptcy. For that reason it is important that you put forward your best possible PIA.
• You must supply your Controlling Trustee with at least 6 months of bank statements. Your Controlling Trustee will examine the statements and report any possible recoveries to your creditors. Your PIA can exclude the recovery of any voidable transactions like a Preference Payments or Transaction to Defeat Creditors.
• Your Controlling Trustee will call a meeting of creditors which you will need to attend. The meeting will be advertised on the ITSA web site.
• The Controlling Trustee will prepare a report to creditors and must form a recommendation as to whether your PIA proposal will provide creditors with a better return compared to bankruptcy. The report will be issued to creditors when the Controlling Trustee calls the meeting of creditors.
• If your PIA is accepted by your creditors a Registered Trustee with ITSA must supervise the PIA. It will be the role of the Registered Trustee to pay dividends to your creditors from the contributions you make towards the PIA.

How do I apply for a Personal Insolvency Agreement?

The first step is to call us on our toll free advice line or to apply on-line. We will take you through our Best Advice Model and will then advise you on the solution which best suits your financial circumstances. After you have supplied us with all of the necessary information we will prepare your PIA for you.

After you have signed your PIA we will lodge it with ITSA. We will then prepare a report to your creditors and call a meeting of creditors so your creditors can vote on your proposal. You will need to attend your meeting of creditors and answer any questions put to you by your creditors.

Will a Personal Insolvency Agreement affect my credit rating?

Your PIA will be recorded on the National Personal Insolvency Index register (forever). This register is maintained by ITSA. Your name will also be recorded on a commercial credit reference database for 7 years, after which time it will be deleted. Your credit is likely to be effected after entering into a PIA or you may be charged a higher rate of interest.

What else should I know before I apply for a Personal Insolvency Agreement?

You might actually pay more under a PIA compared to if you were made Bankrupt. To enquire if you would be liable to make compulsory income contributions under bankruptcy please complete the information on the Bankruptcy Income Contribution Calculator.

Signing the 188 Authority is a serious step and you should know that signing the 188 Authority is an Act of Bankruptcy, which means if your proposal is not accepted by your creditors, then they may rely upon that event which will assist with any application to make you bankrupt. For that reason it is important that you put forward your best possible proposal.

Once signed the 188 Authority is signed it is irrevocable and cannot be reversed.
We recommend that you should visit the web site published by ITSA which has very detailed information on the process of establishing a PIA. You also need to read the Prescribed Information Booklet (Download 365Kb) and sign an acknowledgement that you have read and understood it. This booklet is published by the Insolvency and Trustee Service Australia (ITSA) and must be signed before the process for a Personal Insolvency Agreement can be initiated.
Learn more on the Implications of signing a 188 authority.

Will my home be safe in a Personal Insolvency Agreement?

You will not usually have to sell your property if your creditors accept your PIA (but you may need to release some equity from the property). If you choose to keep your house, you will of course need to keep your mortgage repayments up to date. Your house mortgage stands outside your PIA. If you were made bankrupt your Bankruptcy Trustee would need to take steps to sell the equity in your property, whether that be to your spouse or a third party.

How is the vote counted?

At least 75% of votes (in value) and at least 50% of votes (in number) must be in favour of your PIA.

If your creditors don’t vote in favour of your PIA you will still have the option of negotiating an informal arrangement with your creditors or you can become bankrupt.

Do I have to pay any costs to set up a Personal Insolvency Agreement?

Once your agreement is approved our fees will come out of the regular contributions you make.

Who regulates Debt Free?

Our Registered Trustee with ITSA is a fully qualified Chartered Accountant and is a member of the Institute of Chartered Accountants in Australia and the Insolvency Practitioners Association of Australia. The Insolvency and Trustee Service Australia also regularly monitors and audits our PIA files for strict compliance.

Some typically signs of insolvency may include:

• Cannot afford minimum repayments for all debts; or
• Somebody with many accounts in arrears; or
• Debts have been transferred to collection agents; or
• Debts have been referred to the courts for collection; or
• A Bankruptcy Notice has been issued against you.

Not all signs need to present for you to be considered to be insolvent.

You may complete our on-line debt advice module, which will help you establish the best debt solution for you, whether that is:

• Debt Consolidation Loan;
• Debt Management;
• Debt Agreement
• Personal Insolvency Agreement
• Bankruptcy