Just last week I signed a debt agreement. I had 3 loans, 3 credits cards and debt was up to around 60k. Everytime we started to get back on track something would happen and we would max the credit card out or get a payday loan to help cover it. Our trouble all started when my husband lost his job and was unemployed for 12 months right at the birth of our first child.
I knew we were struggling badly as we barely had 100 left a fortnight after bills and groceries fuel etc so we virtually never had family outings or anything.
I just wanna hear from others who have gone down the path of a debt agreement and how they are now. I feel like a failure right now :(
EDIT - I have signed a part 9 agreement. All interest frozen on all accounts. I did try consolidating my debts but no one would help even though I could afford one, i tried a few companies large and small. My anxiety was going through the roof everytime I had a call thinking it was one of my debtors. I did take a long hard think about it but I still feel so bad.
11 Replies
You still get your name put on the insolvent list that people can look up. Same as bankruptcy just u pay the money back. Ur better off going bankrupt and starting over again and not having to pay the debt since it's a considerable amount.
Totally agree. I did a debt agreement and the outcome is the same. I agree you should just enter full Bankruptcy. If I had my time again I would never do a debt agreement.
Is this a Part IX debt agreement? 60K is a lot of debt, so your creditors may still vote to reject the proposal if your proposed payments are not high enough and they may vote to bankrupt you. This happened to my cousin who was $98.3K in debt and opted to pay $215/week. The unanimous decision from the creditors was bankruptcy as he could not pay to their satisfaction.
Did you get any independent financial advice? There are independent resources available that you can access to see if this is what is best for you. In my personal experience, having been thru $50K+debt (effing ex.....), there may be smaller lenders who are willing consolidate debt under higher interest rate (ours was almost 7% including home loan) who are more understanding of difficult financial positions, defaults etc. We worked our asses off for 3 years to restore our ratings and now refinanced under a a tiny interest rate! We looked into financial agreements but then realised they were most definitely not for us... just be very very careful.
Thank you I did try and consolidate first but no one would help even though I would be able to pay it off if it was just one payment.
Going bankrupt is definitely your last option. It's not an easy 'just start again' as some indicate. Having been there, it effects your credit rating FOR LIFE. Even after discharge, it is very hard to get a home loan, impossible to get a business loan, very hard to get business licences, etc.
The feelings of guilt, failure, rejection, etc effects your mental health and your relationships with family, friends, colleagues.
Paying off your debts is a much better option. For your health and your reputation.
Just be careful to get an agreement through a financial counselor (see Salvos). Some of the commercial operators are just consolidating and making even more debt for you with high interest rates.
Seriously recommend The Barefoot Investor - borrow it from the library and read it now!
Not sure how long your cooling off period is on this agreement but you need to act fast if you do want to change/cancel your contract.
Totally agree! Bankruptcies are not to be taken lightly. Look at your credit file - you can access it for free. See what's on it. Have a look on the moneysmart website and the information/resources it provides. It might seem like it's too much work - but it's not. Debt agreements and bankruptcies are not an easy/simple way out.
This literally was my last option, no company would consolidate for me and I'm not going bankrupt. It's a part 9 agreement. I'm still paying it all back and interested is frozen.
It only badly effects me if I dont pay it off
Part 9 has the same consequences pretty much as bankruptcy. If u go bankrupt at least it frees up ur money to save/ use to live without going into more debt.
Part 9 is under the same act. The same outcome on your equifax record. 5 years it will be on there. Then you will be able to obtain credit again. But it did help me to think about things more when getting credit in future
I have had a debt agreement. I was in a similar position to you. Yes it’s a difficult decision however after the 5 years you are removed from the listing. You are also showing you are paying back the debt and this is favorable to lenders after.
I was able to clear the debt and my credit file in 5 years and now own a home and back on track