Part 9 Debt Agreements

Private insolvency is a legal term that describes your financial situation. If you are unable to pay debts when they are due, you are in default. The agreement of a debt contract or the declaration of bankruptcy is an act of insolvency. Debt agreements are suitable for people who have uncontrollable debt, that is, people who are unable to pay their debts when they mature. In addition, in the past ten years, they must not have had a previous debt contract or gone bankrupt. There are also thresholds for assets, income and all unsecured debt (for more information – contact Safe Debt Management). If a debt contract is an option you`re considering, you don`t have to do it alone. Many debt managers advertise aggressively for their services. Some charge very high fees for services you may not need, and some administrators may not be working in your best interest. It is important that you fully understand the implications of a debt agreement. There may be other options to manage your debt.

When your debt contract is concluded, your unsecured debts will be frozen. This means that when the debt contract comes into effect, no interest or fees can be collected on your unsecured debts. This allows you to pay off your debts over a fixed period of up to 3 or 5 years, through weekly repayments depending on accessibility. After successfully concluding the terms of the debt agreement, you will be released from any unsecured debt included in the agreement. Creditors are contacted in writing by AFSA and invited to vote either in favour of supporting or rejecting your proposed debt contract. You are also asked to provide the amount of outstanding your account, to indicate whether the account is secure or unsecured, if your account is common or if there is a guarantor, or if you have other debts to that creditor. Your debt or joint debt must be included in your debt contract. However, the coach remains responsible for the entire debt. A debt contract is a formal alternative to bankruptcy, where all your creditors agree to accept the partial payment of the debt equally. It is manufactured under Part IX of the Bankruptcy Act.

You don`t have to be able to pay your debts for this type of agreement. If you are bankrupt, you will not have to pay most of the debt you owe. Collection companies stop contacting you. But this can greatly affect your chances of borrowing money in the future. The first relevant date is the processing date, the date on which AFSA accepts your debt contract for processing and sends it to the creditors who will be put to the vote. 35 days from that date or 42 days, when the proposed debt contract is processed in December, is the last day of the vote. This date is called the deadline. A debt contract is not the same as a debt consolidation loan or informal payment agreements with your creditors.

If it`s you, that`s understandable. In some cases, a formal debt agreement can increase your financial stress.

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