Consequences of a Debt Agreement

0 Flares Twitter 0 Facebook 0 Reddit 0 Pin It Share 0 LinkedIn 0 Google+ 0 0 Flares ×

When you begin to get overwhelmed with your debts, and you can’t seem to be able to find the money to pay them on time many people begin to think bankruptcy is the only solution. Before you jump on this bandwagon, consider a debt agreement. A debt agreement is a formalized agreement between yourself and your creditors to pay back a certain amount that you owe.This agreement wipes the rest of your debt away. This agreement is legally binding, meaning you have to keep your word to avoid defaulting which may result in you being declared bankrupt, permanently rfinance

Many factors however have to be considered when filing for a debt agreement with creditors. Check out the benefits and negatives of entering into a debt agreement.

The benefits:

  1. All pending or current legal actions to recover debts are suspended once you lodge the proposal, meaning no debt collectors can contact you or demand payment.Once the agreement is formally accepted, all legal actions against you are automatically cancelled.

  1. Your property is protected against repossession so long as you continue to make your weekly repayments.

  1. You are not bound by the same tight rules as those who have gone bankrupt. You are still able to work in all professions, travel overseas and run your own company.

  1. You have the ability to set how much your repayments are based on your personal situation. The new repayments are based around what you can reasonable afford, not what your creditors demand you pay, this allows greater flexibility and creates less stress.

The Disadvantages:

  1. Your credit score will be temporarily impacted, with any debt agreements showing up on records for 5 years. This affects any future loans within that period of time, however this is still a better option then going bankrupt where this is permanently on your record.

  1. A debt agreement only covers unsecured loans, so any secured creditors such as your mortgagor may choose to seize or even sell your personal assets to recover debts.

  1. Not all unsecured debts are covered by debt agreements, these debts include, debts incurred by fraud, child support, fine, penalties or other court-ordered payment, and HECS

Adebt agreementif right for you, is one of the best ways to deal with large debts you are unable to pay. Before beginning any agreement, make sure to seek financial or legal advice to ensure you are making the correct decision.'

Leave A Reply

three × 4 =

0 Flares Twitter 0 Facebook 0 Reddit 0 Pin It Share 0 LinkedIn 0 Google+ 0 0 Flares ×