Bankruptcy in Canberra - Choices, Choice, Choices

When it comes to Bankruptcy Canberra, there are a number of options that we get given depending upon who we are, who we approach, and exactly what has gone wrong. Among the most common confusion I see with Bankruptcy is when it comes to choosing between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.

Should I consolidate my debts?

When it comes to Bankruptcy in Canberra, a lot of the info you receive on this issue will reflect the interests of the advice giver. That is why, if you call a debt consolidation firm, I can promise you they will tell you to consolidate your debts. The debt consolidation industry is a multi-billion dollar industry making money in one very basic way: charging you a fee for aiding you wrap most of your credit card and personal loans into a single neat and tidy bundle.

I hate to tell you this but these people aren't going to be doing it free of charge. Please don't misunderstand me: if you think your financial issues in Canberra can possibly be fixed by paying less interest, then go ahead and look into the choices. Even a little amount of interest saved over years easily adds up.

Normally I find if you read this blog you've probably tried to consolidate your debts already and come to the following realisations like these:

• Your credit rating is no good, and your credit file definitely has defaults on it so nobody 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 small amount of interest just won't make a lot of difference,.

• You've quite possibly arrived at the stage where you've had enough, you're emotionally burnt out, 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 concerns Bankruptcy in Canberra, what's the difference between a Debt Agreement and a Personal Insolvency Agreement?

Overall flexibility is the main point Personal Insolvency Agreements (PIA) have in their favour. They're also administered by a registered and - might I add - regulated trustee including the government trustee ITSA, and not a private business that advertises on TV. Ultimately this method is similar to Debt Agreements (DA): The trustee holds a meeting with the people you owe money to and they negotiate a deal in your place. You can offer a lump sum settlement figure or take part in a payment plan, or maybe you can offer them assets as an alternative to cash. This may sound alright when it comes to the troubles with Bankruptcy-- that is up until you discover that one of the challenges with PIA's is that 75 % of the people you owe money to must agree on the deal. If they don't, your plan is denied or will have to be renegotiated.

Generally people you owe money want all their money back as well as interest. Sometimes they'll go for beneath the amount you owe them - it's normally a percentage of the debt-- but allow me to stress this aspect: 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 in fact settle for.

In many 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 decideded 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 opting for 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 shrewd lawyers and some very clever structures in place and they offer 5 % of the debt, you might take it and be grateful. Sadly, ordinary punters like you and me in Canberra aren't going to get that lucky!

If you want to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to get in touch with Fresh Start Solutions Canberra on 1300 818 575, or visit our website:freshstartsolutions.com.au/bankruptcy-Canberra.