When it comes to
Bankruptcy Hobart, there are a
number of choices that we get given depending upon who we are, who we talk to,
and just what has gone wrong. One of the most common trouble I see with Bankruptcy
is when it comes to selecting between Debt Consolidation, Personal Insolvency
Agreements, and Bankruptcy itself.
Should I consolidate my debts?
When it comes to
Bankruptcy in Hobart, a lot of the info you receive on this topic will reflect
the interests of the advice giver. That is why, if you call a debt
consolidation firm, I can promise you they will tell you to consolidate your
debts. The debt consolidation business is a multi-billion dollar industry
making money in one very basic way: charging you a fee for assisting you wrap
every one of your credit card and personal loans into a single neat and tidy
bundle.
I hate to tell
you this but these guys aren't going to be doing it for free. Please don't
misunderstand me: if you feel your financial issues in Hobart might be solved
by paying less interest, then go on and look into the options. Even a little
amount of interest saved over years easily adds up.
Typically I find
if you are reading this blog you've probably attempted to consolidate your debts
already and come to the following realisations similar to these:
- Your credit rating is not good, and your credit file already has defaults on it so no one will offer you a loan, consolidated or otherwise,.
- By the time you work all of it out, you're so far down a hole that saving a little bit of interest just won't make a great deal of difference,.
- You've quite possibly arrived at the point where you've had more than enough, you're emotionally worn down, you can't go on another day ignoring blocked calls on your phone, ignoring the demands in the mail and so on.
Personal Insolvency Agreements
So when it comes
down to Bankruptcy in Hobart, what's the huge difference between a Debt
Agreement and a Personal Insolvency Agreement?
Adaptability is
the main point Personal Insolvency Agreements (PIA) have in their favour.
They're also administered by a registered and - might I add - regulated trustee
featuring the government trustee ITSA, and not a private company that
advertises on TV. Ultimately this method is similar to Debt Agreements (DA):
The trustee has a meeting with the people you owe money to and these experts
negotiate a deal in your place. You can give a lump sum settlement figure or
enter into a payment plan, or you can offer them assets as an alternative to
cash. This can sound okay when it comes to the complications with Bankruptcy -
that is up until you realise that one of the obstacles with PIA's is that 75 %
of the people you owe money to will need to agree on the deal. If they don't,
your proposal is rejected or ought to be renegotiated.
Generally the
people you owe money want all their money back as well as interest. Sometimes
they'll opt for beneath the amount you owe them - it's normally a percentage of
the debt - but let me stress this part: 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 in fact settle for.
In many cases
you'll have to pay back 100 % of the debt owed. This is not because your
creditors are greedy or have a mean streak, it's because the administrators
take 20 % of whatever is decideded 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
Bankruptcy and insolvency I've come across 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 brilliant lawyers and some very clever structures in place and they
offer 5 % of the debt, you might take it and be grateful. Sadly, ordinary
punters like you and me in Hobart 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 Bankruptcy, then feel free to contact Fresh Start Solutions Hobart on
1300 818 575, or visit our website:freshstartsolutions.com.au/bankruptcy-Hobart
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