When you are needing debt help and you search online by googling resolve your debt or how to get out of debt, the information you will get can be confusing. So, I’m going to explain some of the important terms for you.
What is insolvency?
Insolvency is simply a state of being where you cannot afford to pay your debts as and when they fall due.
You are insolvent if you cannot pay your debts on time.
What is bankruptcy?
Going bankrupt, is a legal process where a person is declared unable to pay their debts. It is a formal arrangement regulated by the Australian Financial Security Authority or AFSA under the Bankruptcy Act (“Cth”) 1966.
What is debt consolidation?
Debt consolidation typically means entering into a new loan agreement where all your debts are rolled into one and you pay that off which may make it easier to manage debt repayments.
What is a Debt Agreement?
A debt agreement, also known as a Part 9 Debt Agreement, is regulated by the Australian Financial Security Authority or AFSA under the Bankruptcy Act (“Cth”) 1966, is a formal legal agreement entered into with your creditors to tackle unmanageable debt. However, such agreements have complex and long-lasting consequences.
What happens when you choose to go bankrupt?
- You lodge a Bankruptcy Form
- The bankruptcy will be noted on your credit files for 5 years and you may not be able to get credit approved for that time (even for a mobile phone)
- Your name will be listed on a public register called the National Personal Insolvency Index for life.
- Your bank accounts may be frozen.
- If you are in business, you won’t be able to be a director of your company anymore and any shares that you have in your own company will be taken over by the trustee.
- Your trustee in bankruptcy may charge you high fees which will be taken from the sale of things you own (e.g., the part of your house or car that you own or other non-essential possessions)
- You may lose control of your finances for the period of the bankruptcy.
Are there other ways of going bankrupt?
Yes, a creditor may file a sequestration order and the court may force you to go bankrupt.
Is there another way to get debt relief and consolidate your debt?
Yes! These formal legal options should be considered as a last resort as they have long-lasting consequences. The first step is to contact a financial professional, such as the National Debt Helpline.
Solve My Debt Now
Solve My Debt Now also provides professional support and provides our clients with 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 prepare 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!