Warning: Debt Agreements could send you Bankrupt Anyway!
By Julian Thornton
If you are in financial trouble right now and struggling thanks to bad credit, chances are you may have heard of a debt agreement and thought, "It's the answer to all of my problems." It's always best to talk to a professional before you make any decisions regarding what to do when you are in a bad credit situation, however in this article we'll take a look at debt agreements and examine how they can actually end up sending you bankrupt. That's right – they could end up driving you to that one place you don't want to go – bankrupt!
What is a Debt Agreement?
A debt agreement is a simple, legally binding agreement with your credit providers or lenders. It is considered to be an act of bankruptcy, however, you can still secure finance – including a mortgage – if you have a debt agreement. Legally, these are referred to as Part IX (Nine) and Part X (Ten) agreements and upon approval of your creditors (at least 75% or more of the dollar value of your debt) such arrangements can enable you to:
• Make a payment of less than the full amount of all or any of your debts, freeing up extra cash each month;
• Put a stop on the payment of your debts or a stop on the interest that accrues on your debts, allowing you to get some money together to make the payments; or
• Make a transfer of property from you to one or more of your creditors in lieu of full or part payment of the money you owe to them.
How Can a Debt Agreement send me Bankrupt?
As you can well imagine, or as you may know from personal experience, when you are struggling with bad credit, there are people out there who will exploit your vulnerability – even though it's not your fault! For instance, in setting up debt agreements, insolvency specialists and trustees may charge you exorbitant fees that you cannot afford, or they may set up a debt agreement that you cannot afford, which results in you not being able to meet the terms of your debt agreement. In other words, people can end up going bankrupt if they are bound by a poorly-suited debt agreement that they cannot afford.
Avoiding Bankruptcy Compliments of a Debt Agreement
To avoid bankruptcy caused by a debt agreement, the advice is quite plain and simple:
• Find a reputable trustee: A reputable trustee will work with your creditors, on your behalf to negotiate the debt down, which results in a debt agreement you can afford which will help you clear your debt.
• Avoid a debt agreement altogether: This can be done by finding a bad credit expert who will work with you to re-finance. This will result in re-payments that are easier to handle, which will ultimately help you reduce your debt.
• Honour the conditions of the debt agreement: Look at the debt agreement as an opportunity – not a punishment – to help you get out of debt. A good debt agreement will be affordable for you, so that over time, you will clear your debt and be financially secure.
For Further Information
Debt agreements and re-financing may sound to you like great ways to avoid bankruptcy, and this may well be the case for you. To determine for sure though, you need to consult with a bad credit specialist who will assess your situation and provide you with the guidance you need to own your own home and secure a financially independent future.
Call our team today and take the first step towards financial success!
About the Author
Julian Thornton is a Melbourne, Australia-based mortgage and debt analyst specialist. Julian specializes in the field of bad credit mortgages and personal money management coaching. Julian can help literally anybody into their own home and prepare them for financial success.
© Julian Thornton, Little Hinge Publishing, 2006.
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