An Informal Debt Agreement is an agreement between you and your creditors to change the terms on your existing debt contracts. It is a way to get out of debt without the consequences of a Part 9 Debt Agreement or Bankruptcy. It allows you to renegotiate the terms of your debt. You can then settle on a new repayment arrangement – one which is affordable to you.
The benefits of an Informal Debt Agreement
An Informal Debt Agreement can be your secret weapon against bad debt. As soon as you enter the agreement your creditors must cease any recovery action. No more harassing phone calls!
Informal Debt Agreements are highly personalised solutions for people struggling with bad debt. It allows you to tackle your debt head-on while having little impact in the other areas of your life. You will be able to manage your debt in one easy repayment, and the creditors will stop harassing you. By removing this stress, you will be able to move forward toward a debt-free life.
At Debt Rescue, we speak to hundreds of Aussies each week who are exhausted and confused with their debts. We want to provide the best solutions for debt relief and noticed there were very limited options available. Some people wanted to protect their credit file and others didn’t qualify for a Part 9 Debt Agreement. By using a holistic approach to debt relief we saw we could help these people with an Informal Debt Agreement. We call our solution a Debtstroyer Agreement.
What is a Debtstroyer Agreement?
A Debtstroyer Agreement is Debt Rescue’s own brand of informal arrangement. The Debtstroyer Team is a group of highly trained professionals including Accountants and Debt Negotiators. The team will negotiate the terms of your Debtstroyer Agreement to suit your circumstances while still keeping your creditors happy.
Our professional debt negotiators at Debtstroyer can work to reduce your debt through a number of ways. These include:
- Freezing interest and fees on your debts
- Reducing interest and fees on your debts
- Settling your debt by paying a reduced amount in a lump sum payment
- Settling your debt by paying a reduced amount over an agreed period of time
- Negotiating a complete waiver of your debts
- A number of these strategies combined
The difference between a Part 9 Debt Agreement and an Informal Debt Agreement
An Informal Debt Agreement is similar to a Part 9 Debt Agreement. It allows you to reduce your debt, freeze your interest and make your repayments in peace. However, there are some key differences which make an Informal Debt Agreement the preferred option for those who are eligible.
It won’t impact your credit file
Unlike a Part 9 Debt Agreement, an Informal Debt Agreement won’t be noted on your credit file. This is because an Informal Debt Agreement is negotiated privately with your creditors and isn’t legislated by AFSA. It is still a legally binding contract which you and your creditors must adhere to.
If your debts are in arrears prior to entering an Informal Debt Agreement, you may already have a default on your credit file. However, entering an Informal Debt Agreement will help you manage your debts and avoid any further defaults.
Not written into the Bankruptcy Act
An Informal Debt Agreement is not a form of Bankruptcy, so your name won’t be on the National Personal Insolvency Index, nor will it impact your employment. Some professional bodies and trade associations have restrictions and conditions which apply to those with Part 9 Debt Agreements or are Bankrupt.
It doesn’t have limiting criteria
The Australian Government legislates Part 9 Debt Agreements so there are requirements you must adhere to before you apply. Those limits do not apply for an Informal Debt Agreement. If you have a high income, equity in property or excessive debt, an Informal Debt Agreement may be the solution for you.
Is an Informal Debt Agreement right for you?
Because an Informal Debt 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 Informal Debt Agreement. It’s imperative you have experienced, professional Debt Negotiators, like the team at Debtstroyer.
You shouldn’t break the terms of your Informal Debt Agreement by consistently missing repayments without explanation. Your creditors can reinstate your original debts and start recovery proceedings. Remember, an Informal Debt Agreement is legally binding. Your creditors cannot pursue you for any additional funds, but you must stick to the agreed repayments.
Am I Eligible for an Informal Debt Agreement?
To enter a Debtstroyer Agreement, you must be able to prove severe financial hardship. If you have simply fallen behind in your debt repayments or have taken on too much credit, your creditors will vote no and suggest you enter a Part 9. However, if you have extenuating circumstances, you may still be eligible. Some examples of eligibility include severe financial hardship caused by:
- Sudden and unexpected illness or injury
- An unexpected and temporary change in employment
- An unexpected change in living arrangements, such as separation or divorce
You may also be eligible for an Informal Debt Agreement if you fall outside the criteria for a Part 9 Debt Agreement or your employment or industry association restricts you from entering into a Part 9 Debt Agreement.
How to enter an Informal Debt Agreement
If you think an Informal Debt Agreement is the best course of action for you, contact Debt Rescue today. Our experienced Case Managers can determine your eligibility and hand you over to the Debtstroyer Team. The experienced Debt Negotiators will liaise with your creditors to reach a mutually beneficial arrangement. Give us a call today on 1800 00 3328.