Many people face financial difficulties in their life, which can be incredibly stressful for the people going through it. This comes with strings attached, being in debt means cutting on all the expenses to save money. It makes it hard for you to decide what choices to be made further and what is going to be the best option in the short term for you. This is something that cannot be neglected even if you want to. So, it is best for you to accept it and assess the possible options that are available to you and see what will be the best outcome for your problem and the ongoing situation.
If you are in a debt you will face many problems, if left unattended. The creditors are going to make your life so hard, they'll constantly bother you, you'll be searched by the collection agencies and it will ruin your credit history; which matters a lot. You might be thinking that there is no way out, but make no mistakes, there's always a way out. It's for you to decide which one to choose. To help debtors like you, who are struggling to pay their debt, we now have ways that will get you free from your debts.
So, if you're finding it hard to pay your debts on time then stop worrying, a debt agreement is a solution to your problem. By choosing debt agreement you can finally become debt free in a very short time. A debt agreement is an agreement between you and your creditors under the governance of the legislation. If you have low income and have little or no assets, then the debt agreement is a better alternative for you than bankruptcy. This agreement comes under the Bankruptcy Act 1966, Part IX. Under this agreement, your creditors agree on a specific amount of payment from you in accordance with your income and your ability to afford it with a set period to pay off the debts. Your creditors cannot claim the money you owe them after agreeing on a debt agreement.
Debt management is very important to get rid of financial problems. This involves planning on how to manage your debts and creditor. The first thing that you need to do is to stop accumulating any further debts. If you continue to use your overdrafts and credit cards, it will increase your debt cycle. Only making the monthly payments will help you reduce the level of your debts. Debt management will become harder if you have debts with different interest rates. So, it's best to consolidate all your debts with only a single interest rate. By doing this, you will be able to save money and reduce the burden of debts on you. This will reduce your interest liabilities. It is then very essential to plan your budget, this is what makes debt management effective.
It is a simple process, all you must do is write down your income and expenses and then evaluate it. See wherever you can cut the expenses that are not very necessary and control on the outflows of the money. This will save a lot of money for you and can help you cover your debts. One of the best ways to do this is by looking for services that are cheaper and buying the products that are essential for living without wasting money on shopping or other luxuries. It is best to wait for the right time to save money, don't save it under tight circumstances. It will make it even harder for you to manage. Start saving when your debts are under control.
Informal Debt Agreement
There are two types of debt agreements: formal and informal debt agreement. An informal debt agreement is a negotiation with the creditors, but in this type of agreement, the creditors are not bound by the government legislation. The rest of the process is very similar. You and your creditors will decide on a payment plan after evaluating your income and ability to pay and then in accordance to that a payment plan will be made. The debt counselors help you in the agreement process with the creditors. The counselors are meeting with you and your creditors where the payment plan is decided with mutual understanding and benefits. It is not important to involve a debt counselor, but of course, it's always best to have someone involved with an expert advice which can lead to better decisions and agreements.
Government/Formal Debt Agreement
The formal debt agreement, also known as government debt agreement, is the opposite of the informal agreement. Here, the negotiations are between you and creditors under the legislation. The creditors are bound by the government once they enter or agree on the contract. They can't ask for the money you owe them other than the payment plan which is being made after the negotiations under the law. The debt agreement's period is usually over 4 to 5 years. This will keep you and your family safe along with the assets you own.
Everyone in life faces financial difficulties which make it hard for them to pay their debts. So, if you’re one them then don’t worry because now we have ways that will help you to get rid of your debts in a matter of time. A debt agreement is one of the best options, it is a mutual decision made with the understanding between you and your creditors. There are two types of debt agreements; informal debt agreement and government debt agreement. The former one is made without government legislation; however, the latter involves the legislation. The debt agreement helps to make a payment plan while keeping in mind the monthly income and expense of an individual and his ability to pay off the debts.
Steven Rooyen is a husband, father, senior debt advisor and a financial consultant at Sort My Debt. With over a decade of experience in different financial fields, Steven has helped many people resolve their debt problems and provide debt relief in Australia. While not doing that, you can find him reading books and roaming with friends.
Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.