If you’re facing financial difficulties and struggling with debt, a Debt Agreement (DA) can be a beneficial solution to help you escape bad debt and provide you with financial relief. Under our unique Debt Management Plan (DMP), one of the tailored debt relief solutions available is to enter a formal Part 9 Debt Agreement. A Debt Agreement is a legal and binding agreement between you and your creditors, which outlines an affordable repayment arrangement for you to pay down your outstanding debts.
But how can entering a Debt Agreement benefit you?
A Debt Agreement is not Bankruptcy, but is considered an act of Bankruptcy. Therefore once you enter a Debt Agreement, you'll find support and protection against creditor harassment. A Debt Agreement also only affects your credit file for five years, doesn’t limit your future borrowing options and comes with no restrictions on your lifestyle. A Debt Agreement is a positive solution for you to continue repaying your debts, stay on top of your finances and keep your creditors happy.
A Debt Agreement is not a one-size-fits all solution. Just like any debt relief solution, it has benefits and consequences and it’s important to make yourself aware of all the ins and outs before you make the decision to apply. We cover the consequences in our blog, Part 9 Debt Agreement Consequences.
We go into further detail below on how a Debt Agreement can rescue your finances.
The Advantages of a Debt Agreement
1. Stops Creditor Harassment and Further Legal Action
If you’re receiving harassing phone calls from creditors or debt collectors, you must act quickly before they force you into Bankruptcy. When you enter a Debt Agreement, your creditors won’t be allowed to pursue any further legal action. They also won’t be allowed to send you letters or call you for the purpose of debt collection. This allows you to take a step back and breathe – without being chased by creditors.
2. Pauses All Interest and Charges
One of the main causes of financial distress is high interest rates on unsecured debts such as credit cards and personal loans. If you have multiple unsecured debts, you could be paying upwards of 20% interest on each one.
A Debt Agreement immediately pauses all interest and charges on your unsecured debts, providing you with instant relief. For the length of the agreement, you won’t have to pay any further interest, charges or fees on any of your unsecured debts. Once a Debt Agreement is in place, you won’t accrue any further debts.
3. Avoids the Consequences of Bankruptcy
Although Bankruptcy can provide relief if you’re unable to afford your debts, there are consequences which may affect you. Entering a Debt Agreement as an alternative to bankruptcy will provide the opportunity to avoid the consequences of Bankruptcy. Bankruptcy may:
- Impact your income, employment and business,
- Affect your ability to travel overseas,
- Permanently affect your credit file, and
- You may lose your family home and other assets.
4. Allows You to Keep Your Secured Assets
Unlike Bankruptcy, a Debt Agreement allows you to keep your secured assets as long as you continue to pay for them. All secured and unsecured assets must be declared when you enter a Debt Agreement so the agreement can be affordable to you.
At Debt Rescue, we assess your financial situation and tailor a repayment arrangement based on your budget. We factor in your income, household expenses and personal expenses to ensure you will be able to meet the Debt Agreement repayment schedule.
5. You Will be Debt-Free in 3 Years
A Debt Agreement lasts for up to three years. However, if you own your home, you may be able to propose a Debt Agreement for up to five years. Once your Debt Agreement is successfully completed, your debts are effectively settled, freeing you from your debt burden and giving you the opportunity to start over.
Helping Australians Get Out Of Debt Every Day
At Lanyana Financial Group, we provide positive solutions for Australians struggling with debt every day. If you’re facing financial hardship and unsure how to get out of debt, we can assist. When you engage us, we take the time to understand your financial situation and tailor a Debt Management Plan to suit your needs. This may be a Debt Agreement, Informal Debtstroyer Agreement or Bankruptcy.
First published on Debt Rescue.