Afsa What Is A Debt Agreement
An unsecured debt is a debt that is not secured by collateral or an asset, in other words, they have NO collateral. For example, unsecured debts are credit card debts, private credits, bills or tax debts. A mortgage or car loan are not unsecured debts, because they are secured by an asset. If you enter into your debt contract that is repaid, then at the end of the maturity, you are free of most of your unsecured debts that are toxic debts. Compare how it works with continuing payments on your credit cards. You, like many people, can only pay the minimum monthly repayment on your credit cards. This way, you`ll notice that it takes years to pay off your debts. Take a look at the moneysmart website (moneysmart.gov.au). It shows how $1000 on your credit card can be converted into an 11-year loan, because the amount you owe slowly decreases and you pay a large amount of interest. A debt agreement is designed as an alternative to bankruptcy that can protect your wealth.
As long as you keep pace with your asset repayments, such as your car and house loan, as well as your debt contract repayments, your wealth should be protected in general. A debt agreement includes only justifiable unsecured debts. If you have trouble making your payments, either yourself or your debt agreement administrator, you can request an amendment in writing. The proposed amendment will go through the same approval process as the original agreement. Once a debt agreement has been accepted by your creditors, it becomes a legally binding agreement. You must start the repayments provided for in the agreement from which your creditors receive dividends. While the agreement is in effect, interest on your unsecured debts will be frozen and no enforcement action can be taken against you or your property. Once the terms of your debt agreement are concluded, you will be released from any unsecured debt contained in the agreement. With a debt agreement, your creditors agree to accept a sum of money that you can afford. You pay this for a certain period of time to pay off your debts..