How to Find The Right Debt Agreement Administrator and Break Free from Debt

March 6th, 2011 | Posted in Credit Card Debt

Every year, thousands of people enlist a debt administrator to clear their debts and make a fresh start. Selecting the right administrator can ensure you’re treated well and that your debt arrangement has the maximum chance of being approved. To help you choose wisely, it’s useful if you can ask the right questions from the beginning.

What is a Debt Agreement?

A debt agreement is a repayment offer you can make to your lenders when you’re struggling with debt. Under the offer, the interest will be stopped and you’ll repay less than the full debt back. For people in genuine debt stress, lenders will often accept this arrangement if it results in them getting more back from you than they would under a bankruptcy. The repayment offer and plan is put together for you by a licensed debt administrator and then presented to your creditors for approval.

Which Debt Agreement administrator
should I choose?

The key to choosing the right administrator is to ask good questions. In many cases, people reach the end of their debt agreement before they’re familiar enough with the process to know what they should have asked.
To avoid falling into this trap, be sure to ask the following questions up front.

* Do my lenders have a history of agreeing to debt agreements? Your debt administrator will be aware of whether or not your lenders has a history of voting for or against a debt agreement. Many banks will agree to a debt agreement but some lenders won’t so be sure to press this point about your particular lenders when you call.

* Am I giving my lender a high enough return? Every lender specifies a different percentage return of the original debt that they want back from their borrowers under a debt agreement. You must meet this minimum amount in order for your debt agreement to be accepted, so be sure to ask your debt administrator if they are meeting this minimum criteria for each lender.

* Can I afford the repayment plan? After you’ve paid your debt agreement, your Debt Administrator must show to your lenders that you have left over enough to live on. You need to ensure that this figure is realistic, not only for your own sake but also so that the Debt Agreement will be approved. Ask your Debt Administrator whether the amount you have to live on is acceptable to your creditors. Ask them how they have decided this – for instance, have they used an approved poverty index as a guide?

* Would my creditors get a higher return if they sent me bankrupt? If your creditors could get more from you by sending you bankrupt, there’s almost no chance of your debt agreement being approved. Make sure your debt administrator has calculated your bankruptcy rate of return (the figure the lenders will get back from you in a bankruptcy) and exceeded it in your debt agreement offer. Ask your debt administrator what the difference in return is between the two options so you can be sure that this has been done.

If you can follow the above line of questioning from your first call, you’ll walk away with the confidence that you’ve chosen the right debt agreement administrator and that your application is in good hands.

Want to know more about how a Debt Agreement Administrator can help clear your debt? Visit Graham McDermott’s Debt Agreement website.