Debt agreements are sometimes overlooked when considering a debt consolidation solution. One of the main reasons for this is the stigma associated with your agreement being reflected on the National Insolvency Index as well as your Credit Report. It is true that entering a Debt Agreement will limit your ability to qualify for finance for a number of years into the future. However how important is this restriction for someone who is unable to meet their debt payments today?
Granted a debt agreement is not for everyone. If you can manage your current debt repayments, but would simply like to save some money, then a debt agreement is not for you.
However if you are insolvent and are thinking of relief offered by bankruptcy, you should certainly give some consideration to the agreement.
Debt free sooner
Creditors establish debt agreements for a finite period, typically lasting up to 5 years. Over that time, you just need to make the agreed repayments, and by the end of the agreement period, you will completely eliminate your debt (specifically unsecured debts).
No interest on outstanding debts
In a debt agreement, one key advantage over debt consolidation loans is that you don’t pay any interest at all during the full term of the agreement. You make principal repayments as agreed and pay zero interest.
Keep your house
There is no obligation to sell your house to repay your debts. You can enter a debt agreement and continue living your your home and maintain mortgage repayments as before. After all debt agreements only apply to unsecured debts, they do not effect your obligations to your secured creditors.
Avoid bankruptcy
Debt agreements are far less restrictive on the individual than is bankruptcy. You can drive a quality car and/or live in a good house. Providing of course you meet the asset, liability and income thresholds of a debt agreement, you get to keep your assets.
If you want to travel oversea you simply go – there is no-one that needs to approve your trip.
If your income suddenly doubles from $50,000 to $100,000, your payments do not increase. The trustee retains all income over a threshold with bankruptcy to distribute to creditors.
Complete solution for unsecured debts
If you have significant and unaffordable unsecured debts, with limited assets and secured debts then a debt agreement really offers a complete solution and helps you regain peace of mind. Certainly it does have some drawbacks like its impact on your ability to qualify for further credit for some time. However it is a complete solution which will help you become debt free sooner without changing your lifestyle.