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Debt Relief Options
Debt Relief
Options
Debt
Consolidation Loans
Debt consolidation is the process of taking all your debts (credit
card balances, overdrafts, store cards and so on) and consolidating it
into a single, lower cost loan. The purpose of a debt consolidation
loan is to help you pay out your existing debts.
One of the key benefits of debt consolidation loans is they do not
incorporate a credit facility. Debt consolidation loans are a single
amount that you undertake to repay over a set period. It does not
extend further credit to the applicant and as a consequence prevents
you from incurring further debts. This can lead to a cycle of debt
that is difficult to escape. In contrast a debt consolidation loan
gives you a structure to eliminate existing debt.
Informal
Arrangements
Informal arrangements are agreements between you and your creditors
that are not legally binding. By employing the help of a debt
counsellor it is possible to negotiate an arrangement with your
creditors that will reduce your debt level or agree a repayment plan
that is mutually beneficial. A debt counsellor can assist in
negotiations with your creditors for your debt to be reduced on the
condition of meeting a specific schedule, this schedule is known as an
informal arrangement.
Quite often, the informal arrangement does not include the entire
debt and is only a temporary arrangement during periods of
unemployment, illness or injury or maternity leave.
Unfortunately informal agreements are not protected by a court
order or legislation. Consequently they rely on your creditors’
goodwill. It is unlikely that a creditor would cancel your informal
arrangement if you stick to the terms agreed upon.
Debt Agreements
A debt agreement is a negotiated arrangement between you and
creditors governed by government legislation. A debt agreement is a
low-cost alternative to bankruptcy for individuals on a lower income
with few or no assets. Debt agreements are available to debtors with
personal debts below $72,000 and net income under $52,000.
Mortgage Refinance
Mortgage Refinance can assist with Debt Consolidation by allowing
you to consolidate your unsecured debts into your mortgage. This can
assist by significantly reducing your monthly repayment obligations.
Bankruptcy
Bankruptcy is a legal status offering protection from further
action by creditors whose debts are `provable in bankruptcy'. The
usual period of bankruptcy is three years. A trustee may object to a
bankrupt’s discharge prolonging their bankruptcy by as much as five
years under certain circumstances.
Declaring bankruptcy will affect your ability to borrow, hold
company directorship as well travel overseas.
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