When it comes to
Bankruptcy Adelaide, there are a
great deal of choices that we get given depending upon who we are, who we talk
with, and just what has happened. Among the most common confusion I see with Bankruptcy
is when it comes to selecting between Debt Consolidation, Personal Insolvency
Agreements, and Bankruptcy itself.
Should I consolidate my debts?
When it comes to
Bankruptcy in Adelaide, much of the information and facts you receive on this
topic will reflect the interests of the advice giver. Therefore, if you call a
debt consolidation firm, I can assure you they will tell you to consolidate
your debts. The debt consolidation operation is a multi-billion dollar industry
making money in one very straightforward way: charging you a fee for helping
you wrap every one of your credit card and personal loans into just one neat
and tidy package.
I hate to tell
you this but these guys aren't going to be doing it free of charge. Please
don't misunderstand me: if you think your financial troubles in Adelaide may be
solved by paying less interest, then go ahead and consider the choices. Even a
little amount of interest saved over years easily adds up.
Generally I find
if you are reading this blog you've most likely tried to consolidate your debts
already and come to the following realisations such as these:
- Your credit rating is no good, and your credit file already has defaults on it so nobody will give you a loan, consolidated or otherwise,.
- By the time you work all of it out, you're so far down a hole that saving on a bit of interest simply won't make a great deal of difference,.
- You've most probably reached the point where you've had enough, you're mentally fatigued, you can't go on one more day ignoring blocked calls on your phone, ignoring the demands in the mail etc.
Personal Insolvency Agreements
So when it
concerns Bankruptcy in Adelaide, what's the huge difference between a Debt
Agreement and a Personal Insolvency Agreement?
Flexibility is
the main thing Personal Insolvency Agreements (PIA) have in their favour. They're
also administered by a registered and - may I add - regulated trustee featuring
the government trustee ITSA, and not a private agency that advertises on TV.
Essentially this method is similar to Debt Agreements (DA): The trustee has a
meeting with the people you owe money to and these guys mediate a deal on your
behalf. You can give a lump sum settlement figure or enter into a payment plan,
or perhaps you can offer them assets instead of cash. This can sound okay when
it comes to the problems with Bankruptcy - that is until you realize that one
of the challenges with PIA's is that 75 % of the people you owe money to must
agree on the deal. If they do not, your proposal is denied or will need to be
renegotiated.
Generally the
people you owe money want all their money back as well as interest. Sometimes
they'll go for under the amount you owe them - it's generally a percentage of the
debt - but let me stress this aspect: because of all the variables involved in
the negotiation process to put together a PIA its difficult to put a figure on
what the people you owe money to will in fact settle for.
Most of the time
you'll have to pay back 100 % of the debt owed. This is not just because your
creditors are greedy or have a mean streak, it's because the administrators
take 20 % of whatever is agreed upon with the people you owe money to. That
applies whether you use a private company for this process or ITSA, the
government body setup to administer to these PIAs.
When it comes to
Bankruptcy and insolvency I've come across creditors going for less 80 % on
rare occasions, but that usually only occurs with a public company going into
receivership owing huge sums of money (the kind that makes the news). If you
are were owed $10million and you know the people who owe you the money have a
team of brilliant lawyers and some very clever structures in place and they
offer 5 % of the debt, you might take it and be grateful. Sadly, ordinary
punters like you and me in Adelaide aren't going to get that lucky!
If you want to
find out more about what to do, where to turn and what questions to ask about Bankruptcy,
then feel free to contact Fresh Start Solutions Adelaide on 1300 818 575, or
visit our website:freshstartsolutions.com.au/bankruptcy-Adelaide
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