Formal Debt Solutions
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Why do I need a formal debt solution?
We live in a world where change is inevitable. One of the many things in life that can change in the blink of an eye is our financial situation. There are many circumstances that can cause our financial situation to change.
At Fix Bad Credit, we understand that even the best of us are not immune to financial stress. Many a respected business person, and even world leaders, have at one point or another found themselves, or the business they are responsible for, in need of help to address their financial stress.
With the help of a formal debt solution, like bankruptcy, they left the debt behind them and bounced back to being more successful than ever. Rest assured, finding yourself in a situation of financial stress is nothing to be ashamed of.
Financial stress has an impact far greater than we can imagine, and it’s not until we find ourselves in these situations that we begin to understand this. Sometimes we discover this far too late. A study carried out by Relationships Australia reported that financial stress is the number one cause of relationship breakdown in Australia.
Whilst we may think that we can handle the financial pressure and stress ourselves, we need to also consider our loved ones, and others that may also be being impacted. At times like this, a formal debt solution such as bankruptcy or a debt agreement, may be the best option.
Fix Bad Credit has offices in Melbourne, Sydney, Brisbane, Perth, Gold Coast, & Adelaide.
What is insolvent, or insolvency?
It’s easy to fall into debt, especially when your life’s plans go off track. It’s impossible to plan for everything, I mean bush fires, then a pandemic, who knows what’s around the corner? Insolvency is simply an inability to pay your debt when they are due.
When you find yourself unable to meet your debts when they fall due, you have options available to help you. A formal debt solution may be the right option for you.
What is a formal debt solution?
Formal debt solutions have been developed and implemented by the Australian Government to provide options for every day Australian people who find themselves in situations where the debt they carry becomes unmanageable.
At Fix Bad Credit, our goal is to provide you with a clear pathway to financial freedom by removing all the stress associated with those debt collectors; the uncomfortable phone calls, the annoying emails, the threatening letters, and so forth.
We remove the shackles of debt from around your neck, by working with you to find the best fit solution to get you back on track with your finances. We take care of the uncomfortable stuff, so you can get back to what matters the most. Living the best life for you and your family. This is something we all deserve.
What are the different types of formal debt solutions?
There are three options of debt solutions. Let’s briefly take a look at them below.
A Debt Agreement
A Debt Agreement is an option that helps you deal with unmanageable unsecured debts such as credit cards or personal loans. A debt agreement can be a flexible way to come to an arrangement to pay an agreed amount, with all your debts consolidated into one affordable payment to be made on agreed regular basis. You typically pay an amount of less than what you owe, to finalise and settle your debt without becoming bankrupt. A debt agreement is sometimes referred to as a Part 9 or IX, and is arranged by a third-party, known as your debt administrator.
If you want to find out more details about a debt agreement, take a look at our Debt Agreement detailed page. Once you have spoken with Fix Bad Credit’s Credit and Debt solutions expert, we will help you with a no obligation review of your financial situation to identify your options so you can choose the best option for you.
If a debt agreement is your best option, the friendly team at Fix Bad Credit will not only assist you through the process, but be there for you when you come out of the agreement, and help you get yourself in the best financial shape possible.
Personal Insolvency Agreement
A Personal Insolvency Agreement is an option that allows you to make an arrangement between yourself and the companies you owe money to (your creditor) to settle the amount of your unsecured debts. The agreement could involve you paying part or all of your debts by instalments or as a lump sum.
A Personal Insolvency Agreement (Part 10 or Part X), sometimes referred to as a PIA, is administered by a trustee. The trustee takes control of your property and makes an offer to your creditors.
If you want to find out more details about a Personal Insolvency Agreement, take a look at our Personal Insolvency Agreement detailed page. Once you have spoken with Fix Bad Credit’s Credit and Debt solutions expert, we will help you with a no obligation review of your financial situation to identify your options so you can choose the best option for you.
If a Personal Insolvency Agreement is your best option, the friendly team at Fix Bad Credit will not only assist you through the process, but be there for you when you come out of the agreement, and help you get yourself in the best financial shape possible.
Bankruptcy
If you find yourself in a position where you feel you are unable to pay your debts and cannot come to a satisfactory arrangement with your creditors, bankruptcy could be your best option. Bankruptcy will cancel your debt to creditors.
You do need to be fully informed about bankruptcy because some of the consequences may affect your assets. To be more informed about details of bankruptcy, take a look at our Bankruptcy detailed page.
Once you have spoken with Fix Bad Credit’s Credit and Debt solutions expert, we will help you with a no obligation review of your financial situation to identify your options so you can choose the best option for you.
If bankruptcy is your best option, the friendly team at Fix Bad Credit will not only assist you through the process, but be there for you when you come out of the agreement, and help you get yourself in the best financial shape possible.
What are the differences between a Debt Agreement and a Personal Insolvency Agreement?
*As reported by the Australian Financial Security Authority October 2020 – These dollar amounts regularly change to keep up with the Consumer Price Index or the base pension rate. Check here for the most up to date indexed amount.
How to decide between a Part 9 Debt Agreement and a Part 10 Personal Insolvency Agreement
Here is what to consider when trying to make your decision:
✓ Do you meet the eligibility criteria? Check the eligibility criteria for both Part 9 and Part 10 Agreements. The criteria for a Part 9 Debt Agreement is more restrictive, so ensure you are eligible.
✓ Your assets. One of the key differences between Part 9 Debt Agreements and Personal Insolvency Agreements is how assets are treated. Consider what will happen both to your property and to the assets you’ve put up as security when considering your options.
✓ Lasting effects of the agreements. Personal insolvency agreements may be shorter or longer depending on the individual agreement and the level of debt you are in, so it’s difficult to make comparisons here. However, both result in you having a listing on your credit file for up to five years and your name being listed on the NPII – a searchable register of bankrupt people. The difference is that your name will appear for a limited time with a Debt Agreement but it will appear there forever with a Personal insolvency Agreement.
Final Verdict: Part 9 Debt Agreement vs Part 10 Personal Insolvency Agreement
There are three options of debt solutions. Let’s briefly take a look at them below.
The two main differences between Part 9 Debt Agreements and Part 10 Personal Insolvency Agreements are how your assets are treated and what happens once the agreement ends. In a Part 9 Debt Agreement, the only assets that are at risk are the ones you put up as security for loans, and they are only at risk if you fail to make repayments.
In a Personal Insolvency Agreement, your trustee takes control of your property and makes an offer to the creditors who are not able to deal with your property without the consent of your managing trustee.
Your name will be publicly listed on the National Personal Insolvency Index (NPII) only for the period of your Debt Agreement. However, if you enter into a Personal Insolvency Agreement your name will be listed in the NPIII permanently.
These are important facts to consider. Remember that both Debt Agreements and Personal Insolvency Agreements are acts of bankruptcy and the decision should not be taken lightly. These agreements can help you get out of debt, but you need to exercise proper due diligence.
You do need to be fully informed about which formal debt solution is best for you. Some of the consequences may affect your assets. To learn more, we recommend you take a look at each of our detailed pages.
Even better, give us a call, and chat for free with Fix Bad Credit’s Credit and Debt solutions experts. You don’t need to give us your name, if you aren’t comfortable. We will help you with a confidential no obligation review of your financial situation to identify your options so you can choose the best option for you.
If you decide that you are comfortable, and have decided upon your best option, the friendly team at Fix Bad Credit will not only assist you through the process, but be there for you when you come out of the agreement, and help you get yourself in the best financial shape possible.
