Meet the basic eligibility test of ITSA.

Hold qualifications as prescribed in Bankruptcy Regulations

Be currently registered as a Debt Agreement Administrator.

Place all of your contribution monies into a separate account for distribution to your creditors.

Provide you with information concerning your account at any time upon reasonable request.

Keep creditors informed as to the progress of your contributions and debt agreement obligations generally.

Inform creditors and ITSA at prescribed intervals if you fail to meet your obligations.

A debt agreement is not a joke. It is a very serious undertaking and creditors have shown their good faith in supporting you in this difficult time. They have forgone rightful interest and probably written off a portion of the principal. Your financial priority is to honour your obligation to this agreement.

Instalment payments must be made as agreed so that your administrator can satisfy the creditors at the intervals monies have been promised.

If you fail to meet the contributions the debt agreement can be terminated and you will be no better off – much worse off in fact because creditors will back date all interest that they ceased and probably commence legal remedy for recovery.

The creditor is of the opinion that you could make a higher offer of settlement.

Information supplied does not tally with information given at the time of granting credit.

The loan may be very new and a creditor is concerned that original information given may not have been given truthfully or the loan was not used for the purpose it was granted.

Rejection may not be the ‘end of the road’. A new and further proposal can be made to try and satisfy the creditors’ concerns. However all creditors must be treated equally and one creditor cannot be offered more than any other.

If further attempts are rejected then the only alternative may be bankruptcy or private arrangements with each creditor.

They will be sent to you to read, digest, ensure you know what you’re undertaking and signing.

After return the appointed administrator will closely examine the documents and if satisfied consent to act in writing and then direct the documents to ITSA.

ITSA officials will examine the offer made to creditors and if satisfied process those documents first entering personal details on the NPII. At this point all debts are frozen & interest stops accruing.

The proposal is circulated to all affected creditors and each creditor has 35 days in which to consider the proposal and either accept it or reject it.

Acceptance is made if over 50% of creditors who vote, in value, agree. All of the other creditors are caught whether they agree or not – even if they fail to vote.

There will be an initial consultation and the counsellor is required by law to fully inform you of both your obligations to a debt agreement and the alternatives available to you – much of this has been previously explained in this presentation.

There will be a financial assessment to show insolvency and this exercise can be dramatically diminished if you have all of your information ready.

Questions will be asked concerning how and why you have arrived at your insolvent state. Be totally forthright and honest irrespective of the circumstances. This interview and assessment should be absolutely confidential.

The process from interview to creditor acceptance or rejection should take no more than 40 days but you obtain relief from creditors’ demands upon acceptance by ITSA for the processing procedure and annotation of the NPII – 2 days from the return of documents.

Contact a reputable Debt Agreement advisory service, a community based financial counsellor, your accountant or solicitor and place your plight before them for a professional assessment of the position.

Based on the advice received make a decision as to which method you believe to be in your best interests.

If you choose a Part IX Debt Agreement inquire as to who will be administering it.

You can check on the administrator by visiting ITSA website at www.itsa.gov.au.

Do not choose any advisory service that seeks full up front fees. Some will withhold your documents until the full fee has been paid and this will only incur you in delays and additional unnecessary interest charges. It is a fair proposition to settle out of pocket expenses.

Ask if they meet ITSA educational standards and if they are a registered debt agreement administrator.

Ascertain the household income and deduct all of your expenses including car and mortgage or rental payments – include all expenses including gym, school fees, council rates and allow for known expected increases.

Deduct the known expenses from the income and arrive at your disposable income.

Arrive at how much is left over to be used to service payment of all unsecured debt.

If the amount left is insufficient to service the indebtedness then you are insolvent.

If there is sufficient to service the debts then you should adopt a plan to do just that and budget a payment method.

You know you’re in trouble when demands and summons’ start arriving or lenders halt, even temporarily, your credit facilities.

SEEK HELP FROM A PROFESSIONAL ADVISOR

The National Personal Insolvency Index is a data base maintained by the Insolvency Trustee Service Australia, an Executive Government Agency that oversights and regulates Australia’s bankruptcy laws, trustees and administrators.

The data base is one of public information. The public at large, generally, are unaware of this data base and seldom utilise its resources.

The cost of searching a name on the system is $35 and somewhat prohibitive to both commercial and private enterprises.

Veda Advantage and Dun & Bradstreet in particular download new entries on a regular basis in order to update credit file information.

In Debt! – But Want Credit!

It is not unusual for those in debt who seek assistance to escape their financial crisis to bemoan the likelihood of future credit restrictions. Some refuse to face the reality of their position which simply is one of priority.

Q: “If I do a debt agreement will I be able to get a mortgage?”
A: Probably not during the course of administration.

Q: “Will I be able to keep a credit card?”
A: No, all of your creditors must be included into a proposal and they will cancel any ongoing credit. Obtain a debit card and use your own money.

However many people in debt agreements have been able to obtain credit with a supporting letter from their administrator, always based on capacity to meet the obligation, the currency of the contributions and the situation.

Before considering further credit there must be a realisation that past dealings haven’t been up to par and current debt must be dealt with first and foremost.

Your credit reference file will be annotated to this effect for a period of 7 years.

The NPII will be annotated with your personal details and the type of administration entered into – forever.

You will find it difficult to obtain credit from major lenders during the term of the administration.

If you fail to honour the arrangement made the agreement may be terminated by creditors and all of their rights and remedies will be revived including back dating interest due.

You cannot make another debt agreement in the following 10 year period.

If you fail in your attempts to meet the obligations imposed by the debt agreement then bankruptcy may be your only course.

Secured debt payments, mortgage, car etc are allowed for in the Budget;

Settlement is made over a period of time by instalment payment;

All unsecured debt balances are frozen upon submission & ongoing interest ceases;

You are free to go about your life, conduct a business and retain your Passport;

Civil Court judgments cannot be executed upon; Wage garnishees cease; Contributions are paid to and administered by a registered Debt Agreement Administrator;

Upon completion of all of the obligations to the agreement both the NPII and your credit reference file will be noted that you have honoured your undertaking;

You will not suffer the indignity or consequences of a bankrupt;

It is the only administration that does not place your assets at risk!