It is important to determine the best option by undertaking a full financial analysis of your debt position. We will work with you to establish your current situation and recommend the solutions that will enable you to become debt free. Some of the options have differing restrictions and limitations and it is important that you fully understand the ramifications of the best path to take. PDS prides itself on working with you through these difficult times to obtain the right outcome for you. PDS specialises in Debt Agreements and Bankruptcy.
Quick Comparison
| Debt Agreements | Bankrupcy |
|---|---|
| Worked out from your budget and your income, which means repayments are manageable | Has the ability to effectively wipe out your unsecured debt |
| If you income increases, you are not required to make any increase in your payments | If your income increases you may be required to make some payments or increased payments to your creditors. |
| You are generally allowed to keep your house and car as along as repayments are made | Some professions may hold some restrictions on certain licences |
| No restrictions on travelling overseas | You need to seek permission from your trustee to travel overseas |
Debt Agreements
Debt Agreements were introduced in 1996 as a low cost alternative to bankruptcy for consumers on a limited income with few assets or property of value. Initially very few consumers used Debt Agreements, perhaps due in part to being unaware of their existence.
The number of debt agreements in place has increased dramatically in the past few years. This has helped many struggling Australians, and one of the reasons that Debt Agreements have become widely used is due to the increasing of their awareness and the benefits they can provide. Over the years the indexed amounts to qualify have increased so that more people are able to qualify for a Debt Agreement.
Debt agreements are basically an arrangement between you and your creditors (those you owe money to) to pay back their money on a new, agreed, affordable payment plan. The plan combines all of your current unsecured debt, into just one regular payment without accruing interest as your debts are frozen.
Benefits of Debt Agreements:
Some of the benefits of a Debt Agreement are that the Debt Agreement is worked out from your budget and your income which means that your repayments are manageable in your current situation. If your income increases during the term of your debt agreement (or if you are lucky enough to win the lottery!) you are not required to make any increase in your payments, although you can pay it out early with no penalties. You are also generally allowed to keep your house and car as long as you keep up any repayments on them. In addition, there are no restrictions on you travelling overseas.
A Debt Agreement is recorded on your credit file for five years and then erased. It is worth bearing in mind that most people who are contemplating a Debt Agreement may already have a poor credit file.
Debt Agreements are an alternative to bankruptcy where you offer to pay some of the debts owing (as much as you can afford) to avoid going bankrupt. Please refer to our FAQ page for more information on Debt Agreements or for more information on the benefits of a Debt Agreement please contact PDS and ask as many questions as you like.
Bankruptcy
Some debtors really cannot afford a Debt Agreement and may need to consider voluntary bankruptcy.
If you are deep in debt and considering bankruptcy you should talk with PDS first to find out what options are available to ease the debt burden and make it easier for you to get in control of your debts.
Benefits of Bankruptcy:
Bankruptcy might be the right choice for you if you feel you are not in a position to be able to make a sustainable offer to your creditors.
Bankruptcy does have the ability to effectively wipe out your unsecured debts and gives you a fresh start.
If you are being hounded by your creditors and struggling to deal with the stress your financial situation is placing on you and your family then you should contact PDS and discuss how some of the restrictions may affect you. Please refer to our FAQ page for more information on bankruptcy.
A person is generally bankrupt for three years, and their credit rating is damaged for five years. Overwhelmingly, for most people, going bankrupt does not affect their employment in any way.
