Credit Counsellors Australasia - Definitions Page
What is a Debt Agreement?
A debt agreement is a simple means of making an arrangement with all of your unsecured creditors based on your ability to pay. The arrangement is legally binding on both you and your creditors but you will not be released from your obligations until such time as the debt agreement is complete
Debt agreements represent a low cost flexible alternative to bankruptcy.
Back to List
What exactly is Bankruptcy?
Bankruptcy offers the ultimate protection from creditors however it is an action to be taken only in the direst circumstance. You can seek voluntary bankruptcy or you may be forced into bankruptcy on a Creditor’s Petition. In either event, the Court will sequestrate your estate and your financial affairs will be both vested in a Trustee and subject to investigation. You can be prosecuted under the Criminal Code in respect of some matters. Bankruptcy may not relieve you of paying back your creditors – that is a matter for the Trustee to decide based on your earning capacity and other adopted thresh-holds.
- In most circumstances you must declare your bankrupt state when conducting business
- You must give regular reports to your Trustee;
- If you conduct business in a licenced occupation you will lose your licence immediately;
- It may be difficult for you to open a bank account;
- You will certainly find it difficult to obtain any further credit;
- You cannot travel overseas without the permission of your Trustee;
- You will remain an undischargd bankrupt for a minimum period of 3 years.
- Transactions that have taken place prior to sequestration will be investigated and dishonest debtors prosecuted or the transaction may be over-turned by the Trustee.
Back to List
Consolidation Debt Explained
Imagine placing all of you debt into a basket so that it forms just one amount. That is a basic step toward debt consolidation. By consolidating all of your unsecured debt into just one amount you can then repay all of that debt by making just one payment instead of making many payments to each creditor. By formally consolidating your debt you can:
- Avoid the consequences of bankruptcy
- Stop ongoing collection procedures
- Cease all accruing interest
- Combine all unsecured debt into just one payment
- Stop all civil court actions
- Remove wage garnishees
- Obtain peace of mind
Back to List
How do you go about Consolidating Debt?
The first step is to gather all of your current invoices and statements together and then call one of our experienced consultants who will advise you how those debts can be dealt with under the law.
Back to List
Consolidation Loans Explained
If you are already in debt and are experiencing difficulty in paying your creditors then the last thing you need is another loan. However equity in your home can be utilised to settle debt by refinancing that asset. This method of consolidation can only be achieved when the equity in your home exceeds the total value of your debts.
Back to List
Can you help me with my Credit Card Debts?
Yes, credit card debt is unsecured debt and can be included in a debt agreement with your creditors. And, if your creditors accept your proposal for repayment all interest will cease.
Back to List
What is a Credit Counsellor?
The aim of a credit counsellor is to inform you of your alternatives to bankruptcy so that you can arrive at an informed decision about how to deal with your debt. Our counsellors are tertiary qualified, highly trained and experienced people who have helped thousands of Australians gain financial freedom and avoid bankruptcy.
Back to List
What is Debt?
Debt is a claim by one person against another for monies due and owing in respect of goods supplied, services rendered or monies lent. There are two main types of debt:
Unsecured debt includes:
- Credit card debt
- Personal, unsecured loans
- Store card debt
- Taxation debt
- Bank overdraft
- Merchant accounts
- Shortfalls after repossession
- Insurance claims – vehicle accidents
- School fees
- Outstanding rent
- Unpaid utility accounts
- Personal guarantees, after repossession; and many more
Secured debt includes:
- Motor vehicles loans
- Home loans
- Retention of Title
- Liens
And any other loan that will cause repossession in the case of default in payment.
Back to List
What type of Debt Advice can you give me?
The Counsellor you speak with will first assess your financial position. That is the counsellor will calculate your after tax income and deduct your living expenses. This calculation will include the need for you to keep your home and keep your vehicle so that you can go about your life and employment. The balance left over is what is known as your disposable income.
Secondly your Counsellor will assess whether or not you are insolvent. Insolvency is the state of you not being in a position to pay your accounts as and when they fall due.
If you are insolvent then you need to act quickly to stave off bankruptcy and it will be at this point the your Counsellor will assess the options available to you. That advice may be:
- Speak with a community based financial counsellor, if your debt is not serious.
- Try and make an arrangement with your creditors if your insolvency is mild.
- Propose a debt agreement with your creditors and compromise your debt, over time and with just one regular affordable payment if your debt is serious but you owe less than $82,000 and earn less than $82,000 gross.
- Propose a Personal Insolvency Agreement to your creditors if your debt is extreme and you may be in business.
- Propose an informal debt agreement to your creditors if you have been bankrupt in the past 10 years, been terminated from a debt agreement or you earn more than $82,000 annually.
- Lodge a debtor’s petition in bankruptcy – if your financial position is hopeless.
Back to List
Help, I need Debt assistance!
Back to List
What exactly is a "debt Consolidation"?
“debt Consolidation” is placing all of your unsecured debt into just one amount rather than having a number of accounts that require multiple payments. It is a formal mechanism under federal law to avoid the consequences of bankruptcy, if you are insolvent and unable to meet the demands of your creditors. By formalizing your debt by a debt agreement with your creditors you will:
- Avoid the consequences of bankruptcy
- Stop ongoing collection procedures
- Cease all accruing interest
- Combine all unsecured debt into just one payment
- Stop all civil court actions
- Remove wage garnishees
- Obtain peace of mind
Back to List
What our Debt Mediators can do for you
Our counsellors are in daily contact with all major creditors and are recognized as the best in the personal insolvency industry. Creditors are required to vote on any proposal that you may put forward and it is important that such a relationship exists. Your Counsellor will, if necessary, speak directly to your creditors, on your behalf, and assist in reaching an agreement to the mutual satisfaction of all parties.
Your Counsellor will collate and formulate your proposal with your assistance and place it before your creditors.
Credit Counsellors Australasia has an acceptance rate, by creditors, of 96%.
Back to List
Can you help me with my Debt Escape?
Yes, by helping you not only understand your financial position and your state of insolvency but also by assisting you rectify that position. Federal law introduced a mechanism in 1966 under the Bankruptcy Act 1966 (as amended) permitting people in debt to propose a repayment plan to creditors that enables them to settle debt over a period of time and by installment payment. Importantly your proposal of settlement, if accepted by creditors, will not only provide you with the peace of mind you seek but puts an end to ongoing collection procedures, civil court actions, garnishees, and accruing interest. With the assistance of your Counsellor you will only have to deal with the outstanding balance at the time of the proposal being made.
Financial freedom will be within your grasp.
Back to List
Do you need Debt Help?
Consider the following:
- Are you struggling to make ends meet every pay day?
- Are your bills mounting by the week?
- Do you have a workable family budget in place?
- Is your rent or mortgage paid on time and when it is due?
- Has the finance company repossessed or threatened to repossess any goods?
- Is your weekly income being garnisheed?
- Can you afford to send the kids on school outings?
- Are you juggling your income to meet the demands of debt collectors?
- Do you received ‘final demands’ in the mail, or over the telephone?
- Do you refuse to answer the telephone believing it may be a creditor or debt collector?
- Are you stressed out and anxious, not knowing where to turn?
If your answer is yes to any of a number of these questions you are in need of urgent assistance.
Back to List
What exactly is Debt Management?
The following steps are crucial before ‘debt management’ can be put into place:
- Assess your financial health
- Realise your financial situation
- Accept your position
- Seek competent advice
- Take steps to rectify and conquer
Debt Management is not difficult to achieve but it requires discipline and sometimes the need to change one’s lifestyle.
- First, deal with the debt already owing by making an offer to creditors
- Work within a defined weekly budget, and don’t stray from it and make allowances for:
- Annual insurances
- Property maintenance
- Vehicle registration
Every payday:
- Pay an amount off your utility and telephone accounts – any amount will reduce the bill at the end of the day
- Immediately pay your rent or mortgage – or put it away for when it is due
- Set aside a portion of your pay for your car payment. Without a vehicle you won’t keep your job.
- Don’t seek any further credit facilities as it will only compound the situation
Sound debt management commences with you dealing with the mound of debt you already have!
Back to List
How do we come up with our Debt Management Solutions?
First, your Counsellor needs to know the full position.
- Who do you owe?
- How much do you owe to each?
- What is your income?
- What are your living expenses?
- What are your commitments – mortgage, vehicle and other secured debt?
- How many dependants do you have
- Do you have to pay child maintenance
- Do you have any outstanding fines or penalties to government agencies
- What event has occurred in your life that has been the root cause of your situation:
- Unemployment or loss of income
- over use of credit
- bereavement
- domestic discord or relationship breakdown
- ill health
- relocation
- gambling addiction; or
- poor financial management skills
Capacity to pay is the cornerstone of arriving at the proper debt management solution having regard to the total amount of debt to be dealt with.
Back to List
How our Debt Reduction Services work
It is your capacity to pay the debt, over a given period of time that will be the catalyst as to the offer made to creditors. If, after deducting your living expenses and commitments from your income you only have the capacity to settle 65 cents in each dollar then that will be the offer made to creditors. On occasion a client may have the capacity and be willing to pay all of the debt but requires time in order to settle.
Generally formal offers of settlement be they a monetary percentage offer or an ‘over time’ offer will have a time line of between 3 and 4 years at an affordable rate of repayment.
The relationship Credit Counsellors enjoys with creditors has been developed over many years and is reliant upon your offer of settlement being based on your capacity to settle whilst permitting you to go about your life.
Back to List
What type of Debt Relief we can give you?
- An affordable settlement of your creditors, over time
- Cessation of ongoing collection procedures
- Cessation of accruing interest
- Continued enjoyment of your home and vehicle
- A budget that allows you to ‘get on with your life’
- Avoidance of the consequences of bankruptcy.
Back to List
The type of debt solutions we can provide?
- Informal debt agreement with your creditors
- Formal Part IX debt agreement with your creditors
- Formal Personal Insolvency Agreement with your creditors, subject to Trustee
- Voluntary Administration for incorporated entities, subject to Controller
- Receivership for incorporated entities, subject to Controller
- Liquidation for incorporated entities, subject to Controller
Back to List
How we can help your House Loan
In bankruptcy there is a very strong likelihood that your home will be forfeit.
You home is your castle and losing it would be stressful and require you to go out and rent, perhaps at a greater cost than the mortgage payment, and there would also be relocation costs and a bond to find.
A debt agreement will enable you to keep your home, and keep making the mortgage payments.
In any budget formulated by your Counsellor the mortgage payment will be included, as will council rates, maintenance and any other associated costs.
Provided you continue to meet the mortgage payments, and pay your contribution to a debt agreement you will continue to enjoy your home.
Back to List
What is an Unsecured Debt?
In very basis terms, an unsecured debt is a debt that has been incurred in general day to day dealings and the lender has not required some form of security before granting the loan. There is an essence of ‘good faith’ in the transaction.
- Credit cards
- Personal, unsecured loans
- Utility expenses
- Bank overdraft
- Gym fees
- Telephone accounts
- Taxation debt
- Store cards
- General merchants
- Shortfall owing after repossession
Back to List
What is a Secured Debt?
A secured debt is a debt that is subject to any form of lien or mortgage. It will apply to goods in your possession that can be repossessed if you fail to pay the contractual obligation
Back to List
Garnishee Order. What is that?
A Court Judgment must first exist. The creditor will apply to the Court to have a fixed amount of money deducted from your wage or salary. A garnishee can also be obtained against bank accounts and debtors’ ledgers or any other situation where you may have cash assets. A garnishee can be obtained ex-parte, that means without your knowledge or consent but must be based on a Court Judgment.
Back to List
What is the ITSA?
Insolvency and Trustee Service of Australia is a Executive Federal Government Agency with six Australian jurisdictions controlled by an Official Receiver.
ITSA is the regulator of the debt agreement process and guardian of The National Personal Insolvency Index. Official Receivers exercise powers to assist trustees to obtain information and recover property. ITSA investigates possible offences under the Bankruptcy Act and prepares briefs of evidence for prosecution.
Its purpose is to provide a personal insolvency system that produces equitable outcomes for debtors and creditors, enjoys public confidence and minimises the impact of financial failure on the community.
Back to List
Definition of Solvent
A person is solvent if and only if he or she can pay his or her debts from their own monies as and when they fall due.
Back to List
Definition of Insolvent
A person is insolvent if they are not solvent.
Back to List |
