11 Abr Debt Agreement with Government
Debt agreement with government: Everything you need to know
If you`re struggling with debt, you may have heard of debt agreements with the government. These agreements can be a helpful way to get your finances back on track, but they can also be confusing and intimidating. In this article, we`ll cover everything you need to know about debt agreements with the government.
What is a debt agreement with the government?
A debt agreement with the government is a legally binding agreement between you and your creditors, overseen by the Australian government`s Insolvency and Trustee Service Australia (ITSA). It`s a way to avoid bankruptcy and repay your debts over a longer period of time.
While you`re under a debt agreement, your creditors can`t take any legal action against you to recover their debts. You make regular payments to a debt agreement administrator, who distributes the money to your creditors according to the agreement.
Who is eligible for a debt agreement with the government?
To be eligible for a debt agreement with the government, you must:
– Owe less than $118,200 in unsecured debts
– Have a regular income and assets that are less than the amount owed
– Be unable to pay your debts as they fall due
– Have not been bankrupt or under a debt agreement in the past 10 years
How does the debt agreement process work?
The debt agreement process involves several steps:
Step 1: Seek advice from a registered debt agreement administrator
You need to seek advice from a registered debt agreement administrator to see if a debt agreement is the right option for you. The administrator will assess your financial situation and help you to develop a proposal that will be put to your creditors.
Step 2: Develop a debt agreement proposal
Your debt agreement proposal will include:
– Details of your income, expenses and debts
– The amount you can afford to pay each month
– A proposal for how long the debt agreement will last
– Details of any assets you own
Step 3: Submit the proposal to your creditors
Your debt agreement administrator will submit the proposal to your creditors. Creditors have 25 days to vote on whether to accept or reject the proposal.
Step 4: If the proposal is accepted
If the proposal is accepted, you make regular payments to the debt agreement administrator, who distributes the money to your creditors as outlined in the agreement. The debt agreement will be recorded on your credit report for five years or until the agreement is completed, whichever is longer.
Step 5: If the proposal is rejected
If the proposal is rejected, you can renegotiate the terms of the proposal or consider other options, such as bankruptcy.
What are the disadvantages of a debt agreement with the government?
While debt agreements with the government can be a helpful way to manage debt, there are some downsides to consider:
– Your credit rating will be affected – a debt agreement will remain on your credit report for five years or until the agreement is completed, whichever is longer.
– You may need to sell some of your assets – if you have assets that can be sold to repay your debts, you may be required to do so.
– You must keep up with payments – if you miss payments, your debt agreement may be terminated and your creditors can take legal action against you.
– Interest and fees may continue to accrue – while you`re under a debt agreement, interest and fees may continue to accrue, increasing the amount you owe.
In conclusion, debt agreements with the government can be a helpful way to manage debt, but they`re not right for everyone. If you`re struggling with debt, it`s important to seek advice from a registered debt agreement administrator to see what options are available to you.