Debt Agreements

Debt agreement is considered to be a good option for people who cannot afford their existing repayments but can afford some repayment since this type of agreement is a permanent reduction in repayments to lenders based on how much the person in debt can afford. Listed below are a few facts that will help answer questions such as what is debt reduction agreement and how does it work?

When a person in debt opts for a debt agreement he will put all his existing and individual debts in one pool of debt. This means that the person in debt doesn’t have to pay individual lenders and he will have to pay one company or lender who is creating the agreement. Legally all the individual lenders are required to stop contacting the person in debt and all legal action such as bankruptcy are frozen. In addition, interest charges are frozen and whichever debts cannot be paid are written off.

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Qualifying Criteria for a Debt Agreement in Australia

• you must not have a take-home pay (after tax income) of more than $1,135.08 p.w
• your unsecured debts must not exceed $78,915.20 - approx
• you must not have assets of more than approx $78,915.20
• you cannot have been an undischarged bankrupt nor had a Debt Agreement in place over the last 10 years
• you must be insolvent person

Advantages Of Debt Agreement

Individual lenders do not contact the person in debt after an agreement has been created since legally individual lenders are required to stop all forms of communication with the person who has decided to opt for this type of agreement. more>>

Disadvantages Of Debt Agreement

The person in debt who has agreed for a debt agreement basically commits an act of bankruptcy which gives the lender the power to use this in the court of law to declare the person in debt bankrupt if the agreement is not accepted by the lenders or creditors. more>>

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