When it comes down to Filing for Bankruptcy in Perth, there are a great deal of options that we get given depending on who we are, who we talk with, and just what has happened. The most common trouble I see with Filing for 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 Filing for Bankruptcy in Perth, much of the facts you receive on this topic will reflect the interests of the advice giver. Therefore, 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 helping you wrap most of your credit card and personal loans into one neat and tidy bundle.
I hate to tell you this but these guys won’t be doing it for free. Please don’t misunderstand me: if you consider your financial issues in Perth might be fixed by paying less interest, then go on and look into the options. Even a small amount of interest saved over years quickly adds up.
Usually I find if you read this blog you’ve probably tried to consolidate your debts already and come to the following realisations such as these:
- Your credit rating is no good, and your credit file definitely has defaults on it so nobody will give 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 little bit of interest just won’t make a lot of difference,.
- You’ve likely reached the stage where you’ve had enough, you’re emotionally worn down, 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 relates to Filing for Bankruptcy in Perth, what’s the difference between a Debt Agreement and a Personal Insolvency Agreement?
Freedom is the main thing Personal Insolvency Agreements (PIA) have in their favour. They’re also administered by a registered and – might I add – regulated trustee featuring the government trustee ITSA, and not a private business that advertises on TV. Basically this method is similar to Debt Agreements (DA): The trustee has a meeting with the people you owe money to and these guys arrange a deal in your place. You can give a lump sum settlement figure or take part in a payment plan, or you can offer them assets as an alternative to cash. This may sound okay when it comes to the complications with Filing for Bankruptcy– that is until you discover that one of the problems with PIA’s is that 75 % of the people you owe money to will have to come to an understanding the deal. If they don’t, your plan is denied or will need to be renegotiated.
Generally people you owe money really want all their money back plus interest. Sometimes they’ll go 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 actually 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 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 Filing for Bankruptcy and insolvency I’ve heard of 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 frameworks 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 find out more about what to do, where to turn and what questions to ask about Filing for Bankruptcy, then feel free to call Bankruptcy Advice Perth on 1300 879 867, or visit our website: www.bankruptcy-advice.com.au/Perth .