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- July 13, 2016
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When it comes down to Filing for Bankruptcy in Gladstone, there are a bunch of choices that we get given depending upon who we are, who we talk with, and what exactly has gone wrong. Among the most common confusion I see with Filing for Bankruptcy is when it comes to choosing between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.
Should I consolidate my debts?
When it comes to Filing for Bankruptcy in Gladstone, a lot of the related information you receive on this issue will reflect the interests of the advice giver. That is why, if you call a debt consolidation company, I can assure you they will tell you to consolidate your debts. The debt consolidation industry is a multi-billion dollar industry making money in one very simple way: charging you a fee for aiding you wrap each one of your credit card and personal loans into a single neat and tidy package.
I hate to tell you this but they aren’t going to be doing it for free. Please do not misunderstand me: if you believe your financial problems in Gladstone can be fixed by paying less interest, then go ahead and investigate the possibilities. Even a small amount of interest saved over years easily adds up.
Usually I find if you are reading this blog you’ve undoubtedly tried to consolidate your debts already and come to the following realisations like these:
- Your credit rating is no good, and your credit file definitely has nonpayments on it so no one will offer you a loan, consolidated or otherwise,.
- By the time you work it all out, you’re so far down a hole that saving a bit of interest just won’t make a lot of difference,.
- You’ve probably reached the stage where you’ve had enough, you’re mentally drained, you can’t go on yet another day ignoring blocked calls on your phone, ignoring the demands in the mail etc.
Personal Insolvency Agreements.
So when it comes to Filing for Bankruptcy in Gladstone, 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 including the government trustee ITSA, and not a private firm that advertises on TV. Ultimately this method is similar to Debt Agreements (DA): The trustee has a meeting with the people you owe money to and they arrange a deal in your place. You can offer a lump sum settlement figure or enter into a payment plan, or you can offer them assets as an alternative to cash. This might sound fine when it comes to the issues with Filing for Bankruptcy– that is up until you realise that one of the challenges with PIA’s is that 75 % of the people you owe money to have to come to an understanding the deal. If they don’t, your plan is rejected or needs to be renegotiated.
Generally the people you owe money really want all their money back plus interest. Sometimes they’ll go for beneath the amount you owe them – it’s normally a percentage of the debt– but allow me to 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.
In many cases 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 Filing for 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 shrewd lawyers and some very clever frameworks in place and they offer 5 % of the debt, you might take it and be grateful. Sadly, ordinary punters like you and me in Gladstone aren’t going to get that lucky!
If you wish to find out more about what to do, where to turn and what questions to ask about Filing for Bankruptcy, then feel free to contact Bankruptcy Experts Gladstone on 1300 795 575, or visit our website: www.bankruptcyexpertsgladstone.com.au.