Debt agreement pros and cons
Bankruptcy is a scary term that many people think will never apply to them. However, over 18,000 people filed for bankruptcy in Australia last year, with an additional 10,000 forming debt agreements, making it a common issue that a lot of people deal with on a daily basis – and you could too. Understanding bankruptcy and what other options are available to you is crucial to ensuring you get out of debt and on the road to positive financial growth.
Bankruptcy versus Debt Agreements
Bankruptcy is a legal process that releases a person from most of their debts. It may seem like a “fresh start” and the only option, but it can actually have many consequences financially which could adversely affect you in the future. A debt agreement is an alternative to this. It is a legal process to manage unsecured debts while removing and reducing some of the consequences involved with bankruptcy.
The pros of debt agreement
Debt agreement consolidates your debt so you have just one payment to make. Rather than several debts to deal with, you can focus on the one amount, making it easier to manage. Debt agreements also mean a lower interest rate, which means you can pay back the debt faster and easier. You may also qualify for lower monthly repayments, easing the stress and financial pressure.
The cons of debt agreement
Debt agreements aren’t all good, or everyone would be doing it! While for some it is a necessity and the pros far outweigh the cons for those in serious debt, there are a few downsides. No longer repaying numerous debts can make it easy to slip back into bad spending habits and lead to even more debt. Most debt consolidation firms will try to avoid this through advice on responsible financial management tips and tricks. Debt agreements can also mean putting your assets at risk and holding debts for longer due to lower repayments.
It is important to consider both the benefits and downsides of debt agreement and if this fits your situation before applying for this debt solution. Our table – what’s right – can help you to understand which route to rake and should you want to discuss your situation and what is right for you, talk to an expert like those at Professional Debt Solutions. Our team offer a professional and friendly service, so call 1300 353 203 today!