Debt Agreements: The Key to Overcoming Serious Debt Problems

March 2nd, 2011 | Posted in Credit Card Debt

When you’re having difficulty with debt, it can be hard to see the end in sight. No matter what sort of cutbacks you make and how much you try to budget, the debt may just be too great and interest and late penalties can combine to keep you permanently trapped. In this situation, a Debt Agreement can help you clear your debts and make a fresh start.

A Debt Agreement is designed to help you escape debts that have become overwhelming. When you enter one, the interest on your debts is stopped, the payment is reduced to an amount you can afford to repay and all the debts are consolidated into one manageable payment. You then repay this reduced debt over the next 2 – 4 years. Usually, you’ll pay back anywhere between 50 to 80% of what you originally owed.

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.

At this point, you may be wondering why lenders will agree to accept less than the full debt back from you. The reason is quite simple and ultimately, comes down to money. If you’re in debt stress and you choose to resolve it by going bankrupt, in many cases a lender will get nothing back. This is particularly true if you don’t have a lot of equity in a property or have a high income. By doing a Debt Agreement, you ensure that the lender gets a decent portion of their debt back instead and so they favour this option over a bankruptcy. And from your point of view, you get to reduce the debt to a manageable level and avoid having to go bankrupt to deal with your debt.

Because of this, Debt Agreements have become a common method for tackling large and overwhelming debts and entering one could be one of the best decisions you ever make.

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.