Anyone can fall into financial difficulty. Remember, debts are not destined for a particular group of people only. When an individual finds it is impossible to offset certain loans and credit cards as previously agreed to with lenders, there are plenty of options available for people in debt and one of them is a debt repayment agreement. This mode of debt settlement plan has various solutions for different debt situations.
The debt repayment agreement was designed by the Personal Insolvency Act that was enacted in 2012 for people finding it hard to offset personal debts. The arrangement runs for five years, though under certain circumstances, it could be pushed to six. Many people in debt often explore the possibility of using this method to pay off unsecured debts when in financial hardship.
Even though the debt repayment agreement is one way to settle those nagging debts, not everyone qualifies. Before deciding to go for it, there are certain questions someone must answer.
– This arrangement is for people with unsecured debts and no ability to pay off these loans or credit cards for the next five years or more. Although a borrower with secured debts may apply too, remember only the unsecured ones will be catered for. Secured debts are those borrowings with certain goods or property attached in case of non-payment. If at all a borrower fails to pay off the debt, the property that acts as security is taken away or auctioned.
– An individual is only entitled to one debt arrangement plan at a time. In case one has another debt resolution plan underway, it is not possible to be allowed into another agreement to repay debt.
– A consumer must have resided in a given state for a year or more, or be domiciled there. Alternatively, one may be having a business in the state.
- How Do I Go About a Debt Repayment Agreement?
– A borrower is supposed to make a proposal through a PIP or Personal Insolvency Practitioner. This proposal must first of all be agreed to by the borrower and then approved by creditors at a meeting. If there is a unanimous decision between the parties, the borrower is obliged to make regular payments to the creditors through the PIP who will then distribute them according to the terms of agreement.
– During the course of the agreement to repay debt in Australia, the creditors have no right to force a debtor to make any other payments apart from that which was agreed upon. Of course this applies if a consumer sticks to the repayment plan. In case the borrower does not, then another meeting may be convened.
– The duration of the period of payment is a maximum of five years, though an extra year may be incorporated under certain circumstances.
– In case an individual honors the terms of agreements, remaining debts covered under the DRA may be discharged.
– A consumer is supposed to remain with sufficient amount of money to fend for dependants and self.
– There must be an indication of how the debts are to be repaid in the event of death or incapacitation.
Managing huge debts can be a tough venture. A borrower could seek assistance through debt helpline debt repayment agreement. There is no need to suffer in silence as there is always a way out of debts.