Have you been feeling financial pressure lately? If you’ve got a stack of bills to pay and debt collectors at your door, check out these tips to help you get through.

Don’t get sucked into a debt agreement

A debt agreement might seem like the answer to your problems – your debt collectors will leave you alone, and you’ll only have to pay what you can afford.

But there’s a lot more to it than that – debt agreements are akin to bankruptcy, so unless you’re ready to go down the bankruptcy path, steer clear of them.Get Out of Debt

Proposing a debt agreement is an act of bankruptcy, and even if your debt collectors don’t accept it, they’ll be able to use it against you in court to force you into bankruptcy.

Not only that, you’ll have the black mark against your name forever. You’ll be National Personal Insolvency Index (NPII), which is an electronic register of all personal insolvency proceedings.  The NPII can be accessed by any person and will include some personal information about you, including your name, date of birth and address.

And all you need to do to show up on that list is make a proposal for a debt agreement.

If the debt agreement goes through, you’ll still be on that list, and you’ll be legally obliged to tell anyone you ever do business with again about it. This includes new creditors. You’ll also be prevented from working in a number of professions that have regulations restricting those who can legally practice.

All this can happen to you just because you’ve tried to settle your credit card debt with a debt agreement.

Finding your way out of debt can be an overwhelming task – you’re stressed, scared, and you’re out of your depth with the legal jargon. Relationships can break down, and many people suffer mental health problems during these times.

If you’re feeling this way, it is a small comfort to know that you’re not alone.

Household debt is now the highest it’s been in a quarter of a century. National credit card debt has doubled in the last 10 years, and is set to hit more than $52 billion by December 2014. And did you know that Australians spent a record $70.1 billion on credit cards in just couple of months last summer!

However, there’s no such thing as safety in numbers when you’re in debt, so if you’re in deep water it is time to get help.

There are a couple of key things to remember:

  • Settlements are only available on unsecured debts like credit cards with the various banks, medical bills and department store cards such as David Jones.
  • Settling debts is not always about what you know, but often who you know. It is important to choose the right people to deal with. Speaking to the right person and avoiding the uncooperative people can make the difference between settling and not settling.
  •  Be ready to stand your ground. Creditors and collection agencies don’t write off hundreds or thousands of dollars without a fight. You will need to endure this, but don’t give up hope.
  •  Be adaptable with your strategy. What works with one debt collector may not work with another. The fact is that one approach with one institution could trigger legal action with another.
  •  Creditors routinely intimidate with litigation. Most of the time they’re bluffing, but not always. Get professional help so that you know when it’s safe to call the bluff.
  • What if one of your accounts is referred to a law firm? Does that mean for sure you’re getting indicted? Not necessarily. Although your debt consultants aren’t attorneys, there are able to report and negotiate with those law firms.
  • You will need to know what a good offer is, and when you need to reject. For example, a 50c of the dollar settlement offer might be the best offer you’ll ever see with one particular creditor and we should definitely accept that offer. Then there are other creditors that routinely settle for 30-35c of the dollar of the outstanding balance. The key is to know when to accept the offer and when to reject the offer.
  • Should you attempt to settle directly with the creditor or let the account go out to an agency? Don’t let it go to a debt settlement agency because they will only settle for 75c of the dollar and that is their policy. If the person of interest can’t pay then they will bankrupt you.

 

If you’re really struggling, it’s time to get in touch with a debt consultant who can steer you through these difficult times.

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