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Debt Management Plan FAQ

Q.

What is a Debt Management Plan?

A.

Exclusive to Debt Rescue, a Debt Management Plan (DMP) is designed to help if you’re struggling to pay down your debts. Its aim is to reduce your overall outstanding debt amounts by combining them into one, easy to manage repayment amount based on your budget. In order to qualify for a Debt Management Plan, you must:

  • Be insolvent, and
  • Not have been bankrupt or entered into a formal Part 9 Debt Agreement in the last 10 years

A Debt Management Plan can take the form of a formal Part 9 Debt Agreement, an Informal Debtstroyer Agreement or a Debt Settlement.

Q.

Is a Debt Management Plan the same as declaring bankruptcy?

A.

No, although one of the Debt Management Plan options is a formal Part 9 Debt Agreement which is administered in accordance with the Bankruptcy Act as an alternative to bankruptcy. If a formal Part 9 Debt Agreement is recommend for you, it will be ‘committing an act of bankruptcy’.

Q.

How do I qualify for a Debt Management Plan?

A.

In order to qualify for a Debt Management Plan, all you have to do is be experiencing financial hardship. In other words, you just need to be struggling to meet your creditor repayments as they fall due. In most cases, serious financial hardship is due to a negative life shock that leads to over indebtedness such as a job loss or redundancy, a relationship breakdown, bereavement or being diagnosed with an illness or disability.

There are no restrictions on the amount of debt you owe, value in assets you have or income you earn. These factors only play a role in the type of Debt Management Plan recommended for your situation as a Debt Management Plan can be tailored for anyone struggling with debt.

Q.

What debts can be included in a Debt Management Plan?

A.

Most debts can be included in your Debt Management Plan. Our core service is to prioritise secured creditor payments and protect assets, before addressing unsecured debts on your behalf to reduce/pause interest and repay them affordably. In some cases, our team can negotiate repayment arrangements with mortgages, car loans or other secured credit providers to help resolve your financial difficulty.

There are some restrictions on what debts can be included in a formal Debt Agreement.

Q.

Will a Debt Management Plan affect my credit rating?

A.

A Debt Management Plan may affect your credit file depending on if it’s a formal Part 9 Debt Agreement or Debtstroyer Agreement. A formal Part 9 Debt Agreement will be listed on your credit file for 5 years.

Under the new positive credit reporting regime, if you miss a creditor repayment, your credit rating may be affected to some degree.

Debt Consolidation FAQ

Q.

What is a Debt Consolidation loan?

A.

A debt consolidation loan is a loan that is used to clear other existing debts. By bringing all of your debts together into one simple monthly repayment, your debt is paid off quicker. This saves you time, money and reduces debt stress so you can get your finances back on track.

Q.

How can Debt Consolidation help me get out of debt?

A.

Having several credit cards and personal loans can be overwhelming, especially when it comes to managing the repayments. Consolidating your debts to have one manageable repayment removes the stress and confusion associated with keeping track of multiple debts. It also allows you to deal with just one lender, instead of multiple.

Q.

Which debts can I consolidate?

A.

You can consolidate your unsecured debts. Unsecured debts include personal loans, credit cards, or any bills for services you no longer receive. For example, you can include an unpaid bill from an old phone service.

You can also consolidate secured debts, such as your home loan, as long as there is enough equity in the underlying asset. This type of debt consolidation is commonly referred to as mortgage refinancing.

Q.

How will Debt Consolidation affect my credit score?

A.

Generally, applying for a debt consolidation loan will not immediately affect your credit score but should have a positive effect in the long run if you maintain a good repayment history. It will also make it easier for you to avoid payment defaults, which do harm your credit score.

Keep in mind that applying for multiple loans and being rejected will negatively impact your credit score. So you should only apply for credit if you are confident the lender will approve your application for finance.

Q.

How do I know if I need Debt Consolidation?

A.

Debt consolidation is a great way for many people to get out of debt. But it’s not for everyone. A debt consolidation loan will work for you if you are struggling to pay down your debts because you have multiple outstanding unsecured debts. Unsecured debts include credit cards, store cards and personal loans.

Debtstroyer Agreement FAQ

Q.

What is a Debtstroyer Agreement?

A.

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, pause your interest and eliminate fees. Because it is done privately, the agreement isn’t noted on your credit file.

Q.

How do I enter a Debtstroyer Agreement?

A.

Because a Debtstroyer Agreement operates separately to the Bankruptcy Act, there are a few things you need to be wary of. All of your creditors must be on board and agree to your proposal for your Debtstroyer Agreement. It’s imperative you have experienced, professional Debt Negotiators, like the team at Debtstroyer. You shouldn’t break the terms of your Debtstroyer Agreement by consistently missing repayments without explanation. Your creditors can reinstate your original debts and start recovery proceedings. Remember, a Debtstroyer Agreement is legally binding. Your creditors cannot pursue you for any additional funds, but you must stick to the agreed repayments.

Q.

Is a Debtstroyer Agreement right for you?

A.

Because a Debtstroyer Agreement operates separately to the Bankruptcy Act, there are a few things you need to be wary of. All of your creditors must be on board and agree to your proposal for your Debtstroyer Agreement. It’s imperative you have experienced, professional Debt Negotiators, like the team at Debtstroyer. You shouldn’t break the terms of your Debtstroyer Agreement by consistently missing repayments without explanation. Your creditors can reinstate your original debts and start recovery proceedings. Remember, a Debtstroyer Agreement is legally binding. Your creditors cannot pursue you for any additional funds, but you must stick to the agreed repayments.

Q.

What debts can be included in a Debtstroyer Agreement?

A.

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.

Q.

Can joint debts be included in a Debtstroyer Agreement?

A.

Joint debts may be included in a Debtstroyer Agreement. However, Debtstroyer can only negotiate your part of the joint debt on your behalf.

Debt Agreement FAQ

Q.

What is a Debt Agreement?

A.

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 under the Bankruptcy Act 1966 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.

Q.

What are the eligibility requirements for a Part IX Debt Agreement?

A.

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 $115,733.80. 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 $115,733.80 (this includes equity in your mortgage, cars and all other assets)
  • An income less than $86,800.35 after tax each year.

Limits as of 20th March 2019. These limits are set by AFSA and are updated twice each year.

Q.

How long does a Part 9 Debt Agreement stay on your credit file?

A.

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.

Q.

Can I still enter into a Debt Agreement if I receive Centrelink payments?

A.

Provided you can afford the regular Debt Agreement repayment amount, you may still enter a Debt Agreement while receiving Centrelink Benefits or Pension Payments.

Q.

What debts can be included in a Debt Agreement?

A.

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

Bankruptcy FAQ

Q.

What is Bankruptcy?

A.

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.

Q.

What's the minimum amount I need to declare Bankruptcy?

A.

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.

Q.

What other options do I have?

A.

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.

Q.

What debts are covered through Bankruptcy?

A.

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
Q.

How long does bankruptcy last?

A.

The period of bankruptcy generally lasts for three years. It can last for five or eight years under certain circumstances.

Debt Rescue FAQ

Q.

Is Debt Rescue a Registered Debt Agreement Administrator?

A.

Yes, our Registered Debt Agreement Administrator Number is 1337. We are listed on the AFSA RDAA List.

Q.

How long has Debt Rescue been operating?

A.

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.

Q.

Is Debt Rescue a debt collection company?

A.

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.

Q.

What are your operating hours?

A.

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.

Q.

What areas does Debt Rescue service?

A.

Debt Rescue can service the whole of Australia.

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