• Bankruptcy Saves Lives and brings peace of mind

    If I go bankrupt, how much can I earn and how much can I keep?

    Read More

  • Bankruptcy Saves Lives and brings peace of mind

    How Bankruptcy can help you save your house

    Read More

  • Bankruptcy Saves Lives and brings peace of mind

    Find out about others who have gone down this path

    Read More

  • Bankruptcy Saves Lives and brings peace of mind

    Find out about your income and your assets during Bankruptcy

    Read More

  • Bankruptcy Saves Lives and brings peace of mind

    Why a Debt Agreement might not be the right answer.

    Read More

  • Bankruptcy Saves Lives and brings peace of mind

    Having been through bankruptcy myself I can tell you....

    Read More

  • Bankruptcy Saves Lives and brings peace of mind

    Being in business while you are Bankrupt

    Read More

  • Bankruptcy Saves Lives and brings peace of mind

    Bankruptcy is about getting you back on your feet and on with your life.

    Read More

  • Bankruptcy Saves Lives and brings peace of mind

    Find out about this Bankruptcy Assistance Service

    Read More

  • Bankruptcy Saves Lives and brings peace of mind

    Bankruptcy Saves Lives
    and brings peace of mind

    Read More

Debt Agreements

In Australia you don't have to remain miserable and in debt. Life's not meant to be like that. Debt can easily be fixed by either going voluntary bankrupt or entering into what is called a Debt Agreement. I'll tell you a bit about both here.

How a Debt Agreement was supposed to work is that it should be a bit like a consolidation loan, except your creditors are bunched together, and in effect they each individually provide the loan. This is all arranged through a Debt Agreement Promoter or a Debt Agreement Administrator (sometimes they are one and the same).

The theory is that through the debt agreement you should tell your creditors what you can afford to pay, how long you can afford to do it for, and over a period of time how much of the debt you can pay back. Interest sometimes gets frozen, and the balance that you owe may sometimes be reduced, but not often.

They generally don't charge you any more interest. When it's all worked out and put to your creditors, some will say yes, some will say no, but if enough say yes, then the others are stuck with it. Similarly, if enough say no, then it doesn't happen. You can try one more time.

Later you may find that it is unaffordable and so you may decide that you want to change the arrangement, or you just want out. If you want to get out of the Debt Agreement then simply don't make the payments. It's as simple as that. If you don't make any payments for 6 months then the debt agreement is automatically cancelled. That's the law.

In some circumstances however, Debt Agreements could be a way to save the house. Another way to save the house, and this may surprise you, could be to go bankrupt. It works.

My suggestion is that a Debt Agreement should be for no more than about 3 years or so. 3 years is the normal period for a bankruptcy, so a bankruptcy is your other alternative if you consider that a Debt Agreement is unaffordable.

It would be a good idea to read up on both of these alternatives when you realize that you have overwhelming and unmanageable debt.


Posted on 7th July, 2014 | Debt Agreements

Comparing the costs of Debt Agreements with Bankruptcy

In Australia, if you have debt of no more than $105,086 and you’re monthly after tax income is no more than $6,567.93, which is $1,515.68 per week, then to obtain some relief from this debt, both the Debt Agreement option and declaring yourself Bankrupt is available to you. 

The figures used in this article are based on the Debt Agreement Threshold amount applicable on 21st April 2014.

As you will read below getting debt relief through a Debt Agreement is the more expensive of the two options.

Under a Debt Agreement, to pay this $105,086 debt off over 5 years, your annual repayments each year would be $21,017.20, or $404.18 per week, each week, for the 5 year period.   

If you went bankrupt and your net take home pay was $1,515.68 per week, then the maximum amount that you would have to pay into your bankruptcy each week, for 3 years, not 5 years as in a Debt Agreement, would be $252. 62 per week, as your income would be over the minimum Threshold Amount applicable to a bankrupt’s earnings.

In other words, a person (with no dependants) choosing to go bankrupt would have $151.56 per week more disposable income available to themselves for 3 years, to help them to start to get back on their feet and on with their lives.  After 3 years in bankruptcy, no further repayments would be required.

If the person choosing to go bankrupt had dependants, the payments to be made on a Debt Agreement would remain the same, whereas under a bankruptcy, allowance would be made for the fact that the bankrupt had dependants.  The amounts to be paid back to the bankruptcy would become $161.63 per week with 1 dependant and progressively down to $80.84 with 4 dependants. 

Clearly, bankruptcy is the better option to help a person to get back on their feet and on with their lives.  


Posted on 19th April, 2014 | Bankruptcy, Debt Agreements

Page 1 of 2 pages  1 2 >