When it comes to Bankruptcy Newcastle, there are a ton of choices that we get given
depending upon who we are, who we speak with, and what exactly has happened.
One of 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 Newcastle,
most of the information you receive on this subject will reflect the interests
of the advice giver. Therefore, if you call a debt consolidation company, I can
guarantee you they will tell you to consolidate your debts. The debt
consolidation industry is a multi-billion dollar industry making money in one
very straightforward way: charging you a fee for helping you wrap most of your
credit card and personal loans into a single neat and tidy package.
I hate to tell you this but these people
won't be doing it free of charge. Please do not misunderstand me: if you think
your financial issues in Newcastle can be fixed by paying less interest, then
go ahead and check out the options. Even a tiny amount of interest saved over
years quickly adds up.
Typically I find if you are reading this
blog you've undoubtedly attempted to consolidate your debts already and come to
the following realisations similar to these:
- Your credit rating is not good, and your
credit file definitely has nonpayments on it so not a single person will offer
you a loan, consolidated or otherwise,.
- By the time you work all of it out,
you're so far down a hole that saving a tiny bit of interest simply won't make
a lot of difference,.
- You've very likely gotten to the stage
where you've had enough, you're emotionally worn down, you can't go on another
day ignoring blocked calls on your phone, ignoring the demands in the mail etc.
Personal
Insolvency Agreements
So when it comes down to Bankruptcy in
Newcastle, what's the difference between a Debt Agreement and a Personal
Insolvency Agreement?
Adaptability 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 company that advertises on TV. Basically this
process is similar to Debt Agreements (DA): The trustee holds a meeting with
the people you owe money to and these guys mediate a deal in your place. You
can give a lump sum settlement figure or take part in a payment plan, or
perhaps you can offer them assets rather than cash. This might sound fine when
it comes to the problems with Bankruptcy - that is until you realise that one
of the challenges with PIA's is that 75 % of the people you owe money to will
have to agree on the deal. If they don't, your proposal is denied or ought to
be renegotiated.
Generally people you owe money prefer all
their money back plus interest. Sometimes they'll go for beneath the amount you
owe them - it's typically a percentage of the debt - but let me stress this
part: 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 actually settle for.
In most cases you'll have to pay back 100 %
of the debt owed. This is not 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 choosing 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 wise 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 Newcastle
aren't going to get that lucky!
If you would like to find out more about
what to do, where to turn and what questions to ask about Bankruptcy, then feel
free to contact Bankruptcy Experts Newcastle on 1300 795 575, or visit our
website: bankruptcyexpertsNewcastle.com.au.
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