Being in debt can be stressful and overwhelming. Here at Debt Rescue, we focus on education and prevention just as much as we focus on solutions. We want our clients to get out of debt and stay there!
Here are some frequently asked questions about our business and our services. If you have any questions not listed here, please feel free to give one of our friendly Case Managers a call and ask!
Debtstroyer Agreement FAQs
A Debtstroyer Agreement is an informal agreement between one debtor and any number of creditors. Each debt is negotiated privately with your creditors to reduce your principal, freeze your interest and eliminate fees. Because it is done privately, the agreement isn’t noted on your credit file.
Your credit rating will not necessarily be hurt by your Debtstroyer Agreement as long as you keep up with your debt repayments. Falling behind on any repayment – not just a Debtstroyer repayment – can leave you with defaults and judgments on your credit file.
Yes, you can enter a Debtstroyer Agreement while you are on Centrelink benefits. As long as you can afford the negotiated repayment amount.
Any unsecured debts can be included in a Debtstroyer Agreement. These include credit cards, personal loans, utility bills and tax debts. Debtstroyer Agreements can also renegotiate your unsecured debts to fit in with a mortgage refinance or debt consolidation loan.
Joint debts may be included in a Debtstroyer Agreement. However, Debtstroyer can only negotiate your part of the joint debt on your behalf.
You will pay one regular repayment into a trust account and the funds will be distributed to your creditors according to the terms of your Debtstroyer Agreement.
Debt Agreement FAQs
A Debt Agreement is a legally binding agreement between you and your creditors outlining a new repayment arrangement – one which you can afford. Part 9 Debt Agreements are legislated by the Australian Government and provide an affordable, safe way to repay your debts.
Debt Rescue will approach your creditors with a Debt Agreement proposal and let them know how much you can afford towards your debts per month. Your creditors must vote on the proposal and if accepted, you may only have to repay a small percentage of each dollar you owe. This drastically reduces your debt amount, making them more affordable.
As Debt Agreements are legislated by the Australian Government, you must fir within certain criteria before you can enter one. The criteria include having:
- Unsecured debts less than $113, 349.60. If your unsecured debts total more than this amount, you need to look at other options (such as a Debtstroyer Agreement)
- Divisible Assets less than $113, 349.60 (this includes equity in your mortgage, cars and all other assets)
- An income less than $85, 012.20 after tax each year.
Limits as of 20th March 2018. These limits are set by AFSA and are updated twice each year.
Your Debt Agreement will be marked on your credit file for a period of 5 years. During the agreement, your name will also be noted on the National Personal Insolvency Index. This may make it difficult to obtain further lines of credit during the agreement. However, once your Debt Agreement has been repaid (typically after 5 years) your name is removed from the NPII and the agreement is taken off your credit file.
You can rebuild your credit score quite quickly once the agreement is repaid by ensuring you repay your debts in full and on time.
Provided you can afford the regular Debt Agreement repayment amount, you may still enter a Debt Agreement while receiving Centrelink Benefits or Pension Payments.
A Debt Agreement can include all unsecured debts. These include:
- unsecured personal loans
- unpaid utility bills where the service is no longer being used
- disconnected phone bills
- credit cards
- Centrelink overpayments
- mortgage foreclosures
- debt leftover from repossessed cars
Unfortunately, there are some debts which cannot be included in a Debt Agreement. These include:
- mortgage payments
- secured car loans
- SPUR Debts and Fines
- Rental Arrears for an address where you are still residing
Yes. Joint debts may be included in a Debt Agreement. It is best to figure out how the other holder of joint debts plans on dealing with these debts before proceeding. The creditor may choose to pursue the other joint holder to resume the repayments lost through a Debt Agreement.
While the specific terms and conditions of each Debt Agreement are unique to the individuals and lenders involved, in general, a Debt Agreement lasts for 5 years.
One of the unique advantages of a Debt Agreement is that it will allow you to make regular payments that you can afford. The amount is typically related to how much you make and how much you need to spend per month. In other words, you will not be asked to take on more than you can handle with a Debt Agreement; they are designed to help you get out of debt rather than trap you further into debt.
A direct debit will be set up in a Trust Account so your agreed contribution can be submitted under the terms and conditions of the Debt Agreement.
Yes, you can repay your Debt Agreement early with no penalty. However, it will remain as a default on your credit file for 5 years.
A Debt Agreement is a legally binding debt solution. As a result, if you are unable to honour the terms and conditions that you originally signed up for, your creditors may terminate the Debt Agreement and you might be forced into bankruptcy.
People’s circumstances can and do change, and if you find yourself in a situation where you have trouble keeping up with the payments of the Debt Agreement, the administrator may suggest variations to your Debt Agreement. The suggested changes will need to be voted on by creditors in the same way that the terms and conditions of your original Debt Agreement proposal were created.
If your changes are approved, then you will have a new legally binding debt solution that may make it easier for you to keep up with your repayment schedule.
Once your Debt Agreement has finished, you will most likely be able to obtain personal loans again. This will naturally depend on the criteria of the loan and your assets and liabilities at the time you request the loan.
A Debt Agreement has no impact on your mortgage. In fact, a Debt Agreement will improve your cash flow and will make it easier for you to afford your mortgage repayments.
The only way you could lose your house is if you stop making your mortgage repayments. The bank would then be within their rights to repossess your house.
A Part 9 Debt Agreement is just one solution available to help you with your debt. You might also be interested in:
- Debt Consolidation through Mortgage Refinancing
- Informal Debtstroyer Agreement
- Financial Counselling
A Debt Rescue Case Manager will be able to advise you on your options and walk you through the pros and cons of each solution.
Bankruptcy is the legal process of declaring to your creditors that you don’t have enough money or value in assets to repay your debts. It relieves you of your obligation to your creditors to repay your debts and will allow you to wipe the slate clean and start again.
The minimum amount of debt before you can declare bankruptcy is $5,000. However, it is recommended you first try to speak with your creditors to sort out a payment arrangement or investigate alternative options.
Bankruptcy is often considered the last resort for debt relief solutions. That’s because it also has a number of obligations and restrictions which impact your life. There are other debt relief solutions available o you before you have to consider Bankruptcy. These include:
- Debt Consolidation
- Debt Consolidation through Mortgage Refinancing
- Informal Debtstroyer Agreement
- Part 9 Debt Agreement
- Financial Counselling
A Debt Rescue Case Manager will be able to best advise you of your options.
When you declare bankruptcy you must disclose all your debts in a Statement of Affairs. Your Bankruptcy Trustee will determine what is a provable debt and what is not. Common examples of provable debts include:
- Personal loans
- Credit cards
- Store credit
- Utility bills where the service is now disconnected
If your home loan is secured, your creditor has the right to repossess and sell the asset to cover your debt. Any shortfall from the sale of the asset can then be considered a provable debt.
Non-provable debts include:
- SPUR Debts
- Penalties or fines imposed by a court
- HECS-HELP debts
- Debts you incur after the date of bankruptcy
Once your bankruptcy has been approved, a Bankruptcy Trustee will be assigned to your case. Your Bankruptcy Trustee will take ownership and facilitate the sale of your assets. Any proceeds from the sale of your assets will be paid to your creditors.
Your Bankruptcy Trustee will also mandate contributions from your income once you earn over a certain amount. Your income threshold is determined by your situation and how many dependents are in your care.
You will be allowed to keep most household and personal items. Valuable jewellery, antiques and fine art might be sold by your Bankruptcy Trustee. You are allowed to keep work tools up to the value of $3700.
You may also keep a car as long as its value fits within a set threshold. A Bankrupt may not own property, but there are ways you may keep your family home during Bankruptcy.
There are legal ways you may keep your family home through a period of Bankruptcy. Your Bankruptcy Trustee will take ownership of your share of the property. If you have joint ownership of the property with your spouse, your Bankruptcy Trustee may offer to sell your share of the property to your spouse for your share of the equity.
For example, if your house is worth $440,000 and you and your partner currently owe $360,000 you have $80,000 equity in the property. Your partner might be able to purchase your share of the property for $40,000 thus keeping the home in your family.
A Bankrupt is not permitted to own property and it is possible you may lose your home.
You may own a vehicle up to the value of $7,800 during bankruptcy.
In most cases, your bankruptcy will not affect your employment. However, a bankrupt cannot work in certain trades or professions due to restrictions imposed by professional associations or licensing authorities. These positions include a police officer or security guard, realtor and financial advisor.
You cannot be a manager or a director of a company while you are bankrupt. Under certain circumstances, you may continue to operate a business while bankrupt.
Your income will be capped depending on your situation (For example, the threshold for people with dependants is higher than the threshold for a single individual). Any money earned above the set threshold will become a contribution and be distributed among your creditors.
If you are made redundant or receive a pay-out after losing your job, that money can also be made a contribution and distributed to your creditors.
The period of bankruptcy generally lasts for three years. It can last for five or eight years under certain circumstances.
You will be noted as an undischarged bankrupt on your credit file for 3 years. You will then be noted as a discharged bankrupt for a further 2 years once you have been discharged.
You are allowed to apply for a loan or line of credit while you are bankrupt, however, your success will be at the lender’s discretion. You are not allowed to borrow more than a certain amount and there are restrictions on what you can purchase while you are bankrupt.
Exceeding the set limitations can result in harsh penalties so be aware of what you can and cannot borrow.
You may travel overseas while you are bankrupt, but you must apply to the court before you travel. There is a $150 non-refundable application fee and a judge will decide if you can travel based on the case you put forward.
Debt Rescue FAQs
Debt Rescue has been providing positive debt relief solutions since 2005. We are committed to helping everyday Australians overcome financial hardship and live a debt-free life.
No! Debt Rescue doesn’t buy your debt and we certainly don’t hound you for payment. We provide positive solutions to help you pay off your debt in a way you can afford.
Our friendly Case Managers are available to talk to between 8am and 5:30pm AEST, Monday to Friday. However, you can use our website forms to submit an enquiry any time and we will get back to you during office hours.
Debt Rescue can service the whole of Australia.