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 a debt agreement.
Debt agreements are established for a finite period, usually up to 5 years. Over that time all you need to do is make the agreed repayments and at the end of the agreement period you will be completely debt free (unsecured debts that is).
One of the key advantages of a debt agreement over debt consolidation loans is the fact that you are charged no interest at all during the full agreement term. You make principal repayments as agreed and pay zero interest.
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.
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 shoots up from $50,000 to $100,000 your payments are not increased. With bankruptcy, all income over a threshold is retained by the trustee for distribution to creditors.
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 the need to change your lifestyle to any large extent.