If you cannot pay your debts, you may be considering bankruptcy, or an alternative to bankruptcy called a ‘debt agreement’. These are formal legal options available under the Bankruptcy Act 1966.
You can voluntarily become bankrupt by filing a Bankruptcy Form, or you may be forced into bankruptcy when a creditor files a creditor’s petition.
However, there are serious consequences to going bankrupt, which include that:
- Your bankruptcy stays on your credit report for five years and destroys your credit score making it unlikely that anyone will lend you money for five years.
- Your name will appear on the public National Personal Insolvency Index permanently.
- A trustee will look after your financial affairs during the period of the bankruptcy.
- You may have to ask your trustee for permission to travel overseas and you are not eligible to be a director of a company without court permission during the period of the bankruptcy.
- You may not be able to work in certain trades or professions during the period of the bankruptcy.
A Part 9 or Part 10 Debt Agreement provides a more flexible solution to bankruptcy. A Debt Agreement is an agreement between you and your creditors — that is, whoever you owe money to.
While a debt agreement differs from a bankruptcy, the consequences are still serious and will impact your ability to access credit in the future.
For more information on Bankruptcy and Debt Agreements, you can visit AFSA’s website at https://www.afsa.gov.au/.
But don’t despair there are other options available.
There are many other options available for those struggling with debt before they opt for the legal solutions set out in this blog. We recommend you consider seeking professional financial counselling, such as contacting the National Debt Helpline on 1800 007 007 and speaking to a financial counsellor.
Solve My Debt Now also provides an alternative solution. We provide a holistic debt relief solution that can be an alternative to immediate insolvency or bankruptcy.
Our debt relief solution aims to achieve any or all of the following outcomes for you:
- Negotiating with creditors to reduce or waive your debt based on your current circumstances.
- Negotiating with creditors to reduce or suspend your interest payments.
- Where successful, avoid leaving a 5-year black mark on your credit file in contrast to the outcome of a part 9 debt agreement or bankruptcy filings.
- Minimises your contact with creditors wherever possible.
- Setting up payment plans with your creditors within your estimated budget to make paying back your debts manageable over time.
We Can Help You – Today
The Solve My Debt Now team are experienced, non-judgmental professionals who work hard to provide tailored solutions for our clients. Book your FREE Consultation now and talk to one of our qualified SMDN Advocates to see if we can help. It just may be the call that puts you back on the road to financial freedom.