Why Debt Agreements are the Most Effective Debt Solution for Serious Debt Problems

Why Debt Agreements are the Most Effective Debt Solution for Serious Debt Problems

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When you’re having problems with debt, the situation can seem hopeless. Regardless of how many meals you cut down on, how hard you save and how many social events you cancel, the debt may have become too large to manage and the interest rate and late fees may be undoing any small gains you make. In this situation, a Debt Agreement can help you break free from debt for good.

A Debt Agreement is a way out of debt for people who are struggling and fast running out of options. In a Debt Agreement, all the interest is frozen on your debt, the payment is reduced to an affordable level and you pay the new balance back in affordable weekly instalments until the debt is cleared. Usually, this happens within 2-4 years. Typically, you’ll pay back between 50 and 80% of your original debt.

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Several thousand people each year used a Debt Agreement to clear their debts. Your debt agreement application is overseen by the Federal Government and follows a well established process. Firstly, you should contact a licensed debt administrator to discuss your current position. They will assess your debts and who you owe and devise a repayment proposal that your lenders are likely to accept. This proposal is submitted to the Federal regulator to ensure it complies with Debt Agreement guidelines and your creditors for approval. If 50% of your lenders agree, then it becomes binding on all the people you owe money to. From then, you enter your Debt Agreement and make the regular weekly or fortnightly payment agreed to until the debt is cleared.

You might be wondering by this point, why a lender would accept less than the full debt back from you. The reason is quite simple and comes down to simple economics. If you’re having debt problems and you decide to go bankrupt, often your lenders will get nothing back from you. This is the case when you don’t have much equity in a property or your income is not high. By entering a Debt Agreement, you ensure that your lender receives a fair portion of their debt back. For this reason, a Debt Agreement is far preferable to a bankruptcy for most lenders. And you also get to reduce your debt to an amount you can manage and avoid the more serious penalties that go with declaring bankruptcy.

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For this reason, thousands of people enter Debt Agreements every year and it could be one of the most effective ways you ever you use for dealing with your debt.

Want to find out more about how a Debt Agreement can free you free Debt? If so, visit Graham McDermott’s site to secure immediate debt help or get more information on your debt relief options.

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