Sometimes what we fear most in life is actually the only thing that can offer us lasting relief from our problems. If you are feeling suffocated by a debt that you will never be able to repay in full, now may be the time to stand back and consider whether what you are trying to avoid is as frightening as your life with your current debts.
Acknowledge the problem
Sleepless nights and endless worry will get you sick rather quickly but will do very little to address your debt problems. This is something we are rather familiar with as many people who contact us are of medication for anxiety and depression.
The most important thing that you can do is stop kidding your self that a miracle will happen and all financial problems you are facing will disappear. Recognition and acknowledgement is the best way.
You are not alone. People are losing jobs each and every day, business deals go sour, businesses close, relationships break up, people get sick. It happens and more often that we may realise.
All debt solutions ( http://www.debtsolutions.com.au ) available need to be investigated and compare. While bankruptcy is not your first choice, it should not be ignored as a way out of a desperate financial situation.
Is debt agreement an option
Debt Agreements were introduced into the Australian Bankruptcy legislation in 1996. Essentially Debt agreements are a form of debt consolidation ( http://www.debtsolutions.com.au/debt-consolidation/ ) for borrowers who are insolvent and unable to qualify for a debt consolidation loan. Debt agreements have proven to be very helpful to people who are struggling with debt repayment but would rather not declare bankruptcy. Not all forms of debt consolidation are a new loan. Your unsecured debts may be discounted and consolidated into a debt agreement. There is no guarantee that a debt agreement proposal will be accepted by your creditors. However if majority acceptance is in place, all unsecured creditors are bound by the agreement.
Your creditors may decline to accept your proposal and decide to push you into bankruptcy. If this happens, at least you know that you have tried. Ultimately bankruptcy may be your only way to set yourself free.
A debt agreement is not a suitable solution for someone whose debts are essentially secured. This includes home or investment loans or car loans. There is little opportunity to negotiate with lenders whose loans are in fact secured. In most cases they are comfortable in the knowledge that if the asset is repossessed and sold their debts should be covered. However you may qualify for temporary payment reduction or some other hardship consideration if your problems are only temporary.
Holders of assets should try to sell these before the lender makes efforts to repossess. Almost in all cases after costs of repossession are added on less remains to be applied to your debts. Chances of anything being left for the owner after repossession are also slimmer than if owner sells the property of their own accord.
Impact of bankruptcy
Bankruptcy ( http://www.debtsolutions.com.au/bankruptcy/ ) is a temporary state. Most bankruptcies in Australia last for 3 years. A trustee is assigned to your estate. They will sell what they can to repay as many debts as possible. They will also collect any income that you earn over the set threshold during the bankruptcy period. This income will also be applied to reduce debts. You may lose some personal freedoms such as the opportunity to hold certain jobs, be a company director or travel overseas during your bankruptcy term.
Naturally the bankruptcy will be reflected on the National Personal Insolvency Index (permanent record) as well as on your credit report (up to 7 years).
There will be repercussions on your credit worthiness and difficulties to qualify for credit even after you are discharged.
Nonetheless with bankruptcy you will likely pay less towards your debts than if you pursued any other debt solution. Both Debt Consolidation Loans and Debt Agreements ( http://www.debtsolutions.com.au/debt-agreements/ ) tend to cost the applicant more than bankruptcy.
Also as soon as you enter bankruptcy, debt collectors and creditors are required by law to leave you alone. This is a reprieve that you will not get if you try to ‘go it alone’.
Some people struggle with the stigma. However when we consider how many work economies whose financial affairs are managed by educated experts, are effectively in a state of bankruptcy today, what can be expected from a single individual when the unexpected happens?
Life after debt
Do not despair. There is life after debt. Many people who have gone through bankruptcy will tell you that had they taken the leap sooner – it would have saved them a lot of pain and struggle.
Debt Solutions represents a Leading Team of Debt Professionals in Australia. Help is just a phone call away.
P: 1300 332 876