Debt Agreements explained

With financial stress affecting millions of Australian households, a growing number of people were turning to debt agreements as a responsible and informed way of turning their lives around.

Personal debt management company Debt Rescue currently has Debt Agreements in place with clients across Australia.

Debt Rescue operations manager Rachael Witton said the success rate with “rescuing” people from debt through Debt Agreements was significant, with the company spending 4-5 years with each client on average from the initial assessment to the completion of the Debt Agreement..

 “Debt Agreements are just one tool in the armoury of easing financial stress and are often one of the last resorts,’’ Ms Witton said.

“However, when a client is entirely informed about their options they can be a highly effective solution for avoiding bankruptcy and getting out of the financial black hole,’’ Ms Witton said.

Simply put, a formal Debt Agreement is a negotiated agreement between a debtor and a creditor governed by Federal legislation. There are also informal Debt Agreements which are merely a contractual arrangement between debtors and creditors available to clients.

Ms Witton said Debt Agreements provided a low cost alternative to bankruptcy and has fewer limitations on people’s future in the majority of cases.

Other benefits include:

• Unsecured debts are paid through one regular weekly repayment which is more affordable and easier to manage, tailored to the clients’ budget.
• No more interest is charged once your creditors approve the Debt Agreement Proposal
• Once the Debt Agreement is lodged all recovery proceedings and garnishees cease – this means no more harassing phone calls, and your financial and emotional stress is eased.
• An experienced team negotiates with your creditors for you
• A registered and qualified administration service manages all payments to your creditors on a regular basis.

Ms Witton said Debt Rescue carefully assessed each clients’ individual situations and only suggested Debt Agreements if there were no other options.

Often a client’s debt problems could be successfully resolved with less formal strategies including professional assistance with budgeting, money management and direct negotiations with lenders.