Far too often our options seem to cease when our credit cards and bills suddenly turn from CREDIT into DEBT and something that has to be dealt with NOW! Our friendly ‘credit’ provider suddenly becomes a DEBT collector and the friendly smile is suddenly a little bit less friendly looking. Circumstances change, emergencies occur, stuff happens and gradually that easy to manage couple of weekly and monthly payments (nobody ever has only one ‘credit’ card) becomes a mission impossible.
In 1996 the Government introduced legislation called a PART IX DEBT AGREEMENT. The idea was to offer an option to people who were financially overstretched BUT DO NOT WANT TO GO BANKRUPT.
A Debt Agreement is simply an arrangement to reschedule your current unsecured debts into a single payment plan so you can meet your obligations to the best of your ability.
You make a regular single payment to cover all debts covered by the proposal.
Through a Debt Agreement your Administrator will present a proposal to all your creditors outlining the payments schedule that is being offered. We will do a detailed assessment of your budget and make an offer to creditors based on that. Interest is taken off and the Administration fees come out of the amount offered to creditors.
Your unsecured debts are then covered by payments outlined in the proposal; however they are not cancelled until all commitments of the proposal are completed.
A person who has been:
- bankrupt or in a Debt Agreement in the last 10 years or
- has unsecured debts over $80,000 approx
- has assets over $80,000 approx
- has an income of over $60,000 after tax approx.
Note all amounts are indexed quarterly.
After working with Debt Cutter to determine how much you can afford, a proposal is offered to each of your creditors to accept an interest free, reduced amount to pay back your debts.
The proposal is voted on to support or reject the proposal by your creditors; the voting period is 5 weeks. (Debts are frozen and generally no recovery action can be taken during this voting period).
Once the proposal is accepted the Debt Agreement takes effect.
N.B: There are occasions where a proposal is rejected, this is not the end of the world, and the creditor may have changed the criteria or other reasons. If this happens Debt Cutter will put in another proposal free of charge to you if there are no new debts.
The Debt Agreement does go on the public record and your commercial credit reference record. This does not have the same connotations as a bankruptcy and can be viewed in a positive light as you are making a choice to square your debt predicament.
Debt Cutter is a company that specialises in guiding people through the red tape and helping them to make a fresh start.
Your first telephone contact will give you a free assessment of your options and if you qualify then a consultant will assist you to begin the process.
Taking the first step is a positive start to taking control of the debt spiral.
