When it comes to Bankruptcy Perth, there are a great deal of options that we get given depending on who we are, who we speak with, and just what has happened. Among the most common trouble I see with Bankruptcy is when it comes to selecting between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.
Should I consolidate my debts?
When it comes to Bankruptcy in Perth, a lot of the help and advice you receive on this topic will reflect the interests of the advice giver. That is why, if you call a debt consolidation company, I can assure you they will tell you to consolidate your debts. The debt consolidation business is a multi-billion dollar industry making money in one very simple way: charging you a fee for aiding you wrap every one of your credit card and personal loans into one neat and tidy bundle.
I hate to tell you this but these people aren't doing it free of charge. Please do not misunderstand me: if you feel your financial issues in Perth can possibly be solved by paying less interest, then go on and look into the choices. Even a tiny amount of interest saved over years quickly adds up.
More often than not I find if you read this blog you've probably attempted to consolidate your debts already and come to the following realisations similar to these:
- Your credit rating is not good, and your credit file already has nonpayments on it so not a single person 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 on a tiny bit of interest just won't make a great deal of difference,.
- You've most likely gotten to the stage where you've had more than enough, you're mentally fatigued, you can't go on yet another day ignoring blocked calls on your phone, ignoring the demands in the mail and so on.
Personal Insolvency Agreements
So when it comes down to Bankruptcy in Perth, what's the big difference between a Debt Agreement and a Personal Insolvency Agreement?
Adaptability is the main point Personal Insolvency Agreements (PIA) have in their favour. They're also administered by a registered and - may I add - regulated trustee including the government trustee ITSA, and not a private firm that advertises on TV. Ultimately this process is similar to Debt Agreements (DA): The trustee has a meeting with the people you owe money to and these guys mediate a deal on your behalf. You can give a lump sum settlement figure or enter into a payment plan, or you can offer them assets as an alternative to cash. This may sound alright when it comes to the troubles with Bankruptcy - that is until you realise that one of the obstacles with PIA's is that 75 % of the people you owe money to will have to agree on the deal. If they do not, your proposal is denied or must be renegotiated.
Generally the people you owe money prefer all their money back plus interest. Sometimes they'll opt for under the amount you owe them - it's typically a percentage of the debt - but allow me to stress this part: 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 really settle for.
In most 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 agreed 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 choosing less 80 % on rare occasions, but that usually only occurs with a public company entering 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 brilliant 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 Perth aren't going to get that lucky!
If you want to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to get in touch with Bankruptcy Experts Perth on 1300 795 575, or visit our website:bankruptcyexpertsPerth.com.au.