No, although debt contracts are managed in accordance with bankruptcy law, they are an alternative to bankruptcy. However, by submitting a proposal, you are committing “an act of bankruptcy.” The intention of this article is to base only a few of the common misunderstandings about debt agreements. Although we have mentioned most of the myths and misunderstandings, this is by no means a definitive list. For more information on debt agreements and their impact on your living conditions, you can consult Debt Fix for free or contact the AFSA Australian Financial Security Authority, the government authority responsible for overseeing the operation of the Debt Agreement Scheme. Only demonstrable unsecured debts, such as medical bills, memory cards, credit cards and some private loans, can be included. When your debt contract is concluded, your unsecured debts will be frozen. This means that when the debt contract comes into effect, no interest or fees can be collected on your unsecured debts. This allows you to pay off your debts over a fixed period of up to 3 or 5 years, through weekly repayments depending on accessibility. After successfully concluding the terms of the debt agreement, you will be released from any unsecured debt included in the agreement. The consequences of Part 9 of the debt contract only apply if you are in the agreement. There are no long-term consequences. Indeed, if you are really struggling with the debt, an agreement of Part 9 of the debt offers a simple and effective solution of debt cancellation. A Part 9 debt contract has no impact on your job, your salary, the wealth you own, the car you drive or any real estate you own.
It will simply provide you with a workable action plan to pay off your debts. Unfortunately, there are no quick fixes to managing uncontrollable debt. Filing for bankruptcy involves many requirements and restrictions, such as the sale of assets by an agent, monitoring your income, losing certain commercial licenses and abandoning your passport, your credit score is a great success (to name a few). Through a debt contract, you are in principle asking your creditors for a fair path by offering them your best offer. In this way, you can keep assets with shared equity up to the value of the asset limit (more information – contact Safe Debt Management). You will not have your income monitored and you will not have to hand over your passport. All unsecured creditors have the right to vote. A secured creditor can only vote for an unsecured portion of its debt. For example, if you have a guaranteed loan for a car for which you owe $24,500 and your car is valued at $19,000, the secured creditor has the right to vote on the unsecured portion of that debt.
In this example, it is $5,500. This is due to the fact that the value of your car is less than the amount you owe and that this part or lower amount is considered an unsecured debt.