When it comes down to Filing for Bankruptcy in Alice Springs, there are a number of choices that we get given depending upon who we are, who we talk to, and exactly what has gone wrong. The most common confusion I see with Filing for 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 Filing for Bankruptcy in Alice Springs, a lot of the related information you receive on this topic will reflect the interests of the advice giver. Therefore, if you call a debt consolidation provider, I can promise you they will tell you to consolidate your debts. The debt consolidation operation is a multi-billion dollar industry making money in one very simple way: charging you a fee for helping you wrap all of your credit card and personal loans into one neat and tidy package.
I hate to tell you this but these guys aren’t doing it free of charge. Please do not misunderstand me: if you consider your financial problems in Alice Springs can possibly be fixed by paying less interest, then go ahead and check out the options. Even a tiny amount of interest saved over years easily adds up.
Normally I find if you are reading this blog you’ve most likely attempted to consolidate your debts already and come to the following realisations like these:
- Your credit rating is not good, and your credit file already has defaults on it so not a single person will give you a loan, consolidated or otherwise,.
- By the time you work it all out, you’re so far down a hole that saving on a small amount of interest just won’t make a great deal of difference,.
- You’ve very likely gotten to the stage where you’ve had enough, you’re mentally burnt out, you can’t go on yet another day ignoring blocked calls on your phone, ignoring the demands in the mail etc.
Personal Insolvency Agreements.
So when it comes down to Filing for Bankruptcy in Alice Springs, what’s the big difference between a Debt Agreement and a Personal Insolvency Agreement?
Adaptability is the main thing Personal Insolvency Agreements (PIA) have in their favour. They’re also administered by a registered and – may I add – regulated trustee featuring the government trustee ITSA, and not a private company that advertises on TV. Ultimately this process is similar to Debt Agreements (DA): The trustee holds a meeting with the people you owe money to and these guys work out 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 instead of cash. This can sound okay when it comes to the complications with Filing for Bankruptcy– that is until you discover that one of the difficulties with PIA’s is that 75 % of the people you owe money to must agree on the deal. If they do not, your proposal is rejected or will have to be renegotiated.
Generally the people you owe money want all their money back plus interest. Sometimes they’ll go for less than the amount you owe them – it’s normally a percentage of the debt – but let me 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 truly settle for.
In many cases you’ll have to pay back 100 % of the debt owed. This is not just 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 Filing for Bankruptcy and insolvency I’ve heard of creditors settling for 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 clever 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 Alice Springs aren’t going to get that lucky!
If you would like to find out more about what to do, where to turn and what questions to ask about Filing for Bankruptcy, then feel free to contact Bankruptcy Experts Alice Springs on 1300 795 575, or visit our website: www.bankruptcyexpertsAliceSprings.com.au.