For a lot of people, entering into a Part IX (9) Debt Agreement is a great way to avoid bankruptcy. But depending on your circumstances, you may better off choosing another option.
TV and radio advertising is always pushing debt agreements as the perfect solution to everyone’s debt problems. But in a lot of cases, a debt agreement won’t provide the financial fix they all promise.
Here are few things they don’t tell you about debt agreements:
- Debt agreements are not the same as debt consolidation loans. They’re actually a form of Bankruptcy, administered under Part 9 of the Bankruptcy Act.
- Debt agreements appear on your credit rating and are recorded on the National Personal Insolvency Index. That means they’ll affect your credit rating just as bankruptcy does.
- In some circumstances, you’ll be paying back your debts for a long time. And if the debt agreement period is excessive, you may even have to pay large fees.
So before you enter into a debt agreement:
- Review all of your options with a qualified bankruptcy trustee and debt agreement administrator such as Revive.
- Make sure the payments under the agreement still let you enjoy a reasonable standard of living. If you don’t have any money left over after paying your monthly contribution, what’s the point of having a debt agreement in the first place?
- Make sure the length of the agreement isn’t too long. You want to be able to get on with your life, not have a debt agreement continually hanging over your head.
- Make sure the debt agreement has reasonable payments you can achieve. If they aren’t the agreement will fail, and the creditors will be able to make you bankrupt and/or enforce their debts.
For more information on personal insolvency, check out our personal insolvency page here.