Being in debt is a huge headache. With the cost of living in Australia spiralling out of control, many of us are experiencing that familiar sinking feeling of opening the mailbox, to find yet another bill glaring out at us. Perhaps you even have even been getting phone calls from aggressive creditors?
Well, the good news is that there are debt relief options available in Australia such as financial counselling, Part IX Debt Agreements, Part X Personal Insolvency Arrangements and Bankruptcy, which can help you get your finances back on track.
What are they?
Australian debt relief options are designed to help you manage your finances better. Each option is different so it’s important that you understand the differences in order to decide the best option for you.
- Financial counselling is a free service that can help you get back on your feet if you are struggling to buy food but it could take weeks or even months for an appointment to be offered
- Part IX Debt Agreements are a formal agreement where your creditors accept a fixed payment plan that you can afford
- Part X Personal Insolvency Agreements are similar to debt agreements where you repay your creditors in a formal arrangement, however, there are no limits on debts, assets and income.
- Bankruptcy will wipe the majority of your unsecured debts. The consequences of bankruptcy are serious so we recommend you explore all of your other options first.
When do I need one?
There are many signs that you are creating a debt trap for yourself. Do you find yourself putting items on a credit card, as you do not have the cash to pay for them? Do you feel that your salary has dwindled down to nothing half way through the month? Do you hold your breath every time you make a card payment, as you are never sure that it will work?
If the answer is yes to these, it may be time to familiarise yourself with the options out there, to get yourself out the financial nightmare.
What are the benefits?
Debt can put a huge stress on families and relationships, and sometimes if you are only paying off the interest, it can feel like you are trapped. By better managing your debts, it means you can really start to make a difference in terms of getting your life back on track.
Some of the benefits can include feeling financially confident, understanding which debts you want to prioritise, developing a debt management plan and understanding other factors affecting your situation such as health, stability of employment or relationship status. This is handy for those of us who kick ourselves, when we realise we have missed another payment due date.
A debt agreement is one Australian debt relief solution that allows you to pay off your debts. The repayment will be an amount that is acceptable for your creditors and affordable for you. The amount of debt you have, what your creditors will accept and what you can afford are all taken into consideration. Once creditors accept your debt agreement, it forms the new contract that you and your creditors adhere to. You will then make one agreed payment to the debt agreement administrator and creditors will accept a lower amount overall to clear the outstanding debt.
Why now?
Unmanageable debt is on the rise in Australia, which means the real cost of debt can have a major impact on your wellbeing. As well as the stress factor, overwhelming debt can lead to getting default and judgements listed against you, or in really extreme cases creditors making you bankrupt.
It is never too early or too late to talk to a professional about sorting out your finances. In fact, most people face some sort of unmanageable debt at least once in their life. Even if you feel overwhelmed about the amount of debt you have in your name and struggle to raise the topic with family and friends, today is always a good day to start seeking professional advice.
What you need to look out for?
First of all, it is important to know that the Australian debt relief options are not a free ride out of debt and by setting up a debt solution, it doesn’t mean that your financial situation is all sorted. Give yourself a pat on the back since you have taken the first proactive steps in improving your finances but remember to check the small print. For example, consider that paying off debts at a lower amount can mean that it actually takes longer to get rid of them and some debt help options will impact your credit rating for roughly next 5 years.
Applying for financial hardship with your creditors can be a good solution, as they can reduce interest payments and other fees. For some, this may only be a short-term strategy. It is important to be honest with yourself and to speak with our debt management consultants on 1300 368 322 as to how much you can realistically manage.
There are things to be aware with debt agreements. They can impact your credit score and your ability to obtain credit in the future. They are best suited if you have bad credit and already tried other methods such as financial hardship. For example, a debt agreement would not be the right option for you if you are up to date with your debt repayments. There are better options available such as budgeting, debt consolidation and financial hardship.
What else can I do?
It is also worth looking at ways you can generate additional sources of income. Do you have the time and energy to take on extra part time work? Are you able to downgrade your car, or limit your outgoings in other ways, such as reducing or cancelling any expensive gym memberships?
There are also some very good debt counselling services out there, to help you break the behaviour patterns, which may be holding you back. Most of these services do not cost anything to take up. Additionally, free legal advice about your debts can be arranged through community legal centres, charities or Legal Aid.
ASIC assistance
The Australian Securities and Investment Commission, known as ASIC, has some good independent advice on their Moneysmart website, such as a mobile app called Track My Spend. This allows you to record all your outgoings, such as household expenditure, work and travel expenses, one-off large costs, such as weddings, plus all the random bits and pieces which all add up. It allows you to track your history, organise your spending out into ‘wants’ and ‘needs’, plus you can set up handy alerts.
How we can help
Unfortunately, unless you win the lottery, there is usually no quick fix to get yourself out of debt. But, the important thing is to take steps to change your financial future. With the right advice, it is possible to pick the right debt solution for you and put a sensible plan in place to get your finances back under control again.
A reputable debt relief service will help you take the first steps to climbing out of any financial hole. We’re here to help! Get in touch with one of our expert debt management consultants for an obligation free chat about your situation. We’re professional, knowledgeable and reliable. Contact us today by filling in the form below, start a web chat with us or call 1300 368 322 to take back your financial freedom.