The March 20 increase in the debt threshold signifies the first time the threshold has surpassed the $100k mark, which in itself is a milestone, however it should be noted that increases in thresholds are regularly changed in line with the base pension
Sydney, New South Wales (PRWEB) April 03, 2013
The Federal Government announces an increase in debt agreement thresholds enabling insolvent debtors with less than $100k of unsecured debt to take advantage of Part IX of the Bankruptcy Act as an alternative to Bankruptcy. According to ITSA (Insolvency and Trustee Service of Australia);
“...A Part IX debt agreement is a legally binding agreement between a debtor and their creditors. Debt agreements are a flexible alternative to bankruptcy…”
Significantly the increase of the debt threshold to $100k opens up the doors for debtors struggling to regain control of their finances and wanting to avoid the harsh consequences and stigma of bankruptcy.
Former Attorney-General, Robert McClelland, Tuesday, 25 August 2009 described the Debt Agreement Scheme as a win/win for debtors and creditors alike: “...The figures indicate that debt agreements usually recover about 76 cents in the dollar, whereas bankruptcy only tends to recover on average about 1.6 cents in the dollar. So there can be better outcomes all round...”
Last year, Debt Agreements returned more than $100m back to creditors. To draw a comparison to bankruptcy, significantly less money was returned to creditors.
Debt Agreement Suitability
Debtors wanting to raise a debt agreement should only do so after seeking professional advice from a Registered Debt Agreement Administrator. A strict and rigorous compliance and regulation regime instigated by the Government ensures the integrity of the scheme is upheld.
Grant O’Donnell, director and founder of Debt Fix (one of Australia’s largest debt agreement companies) said yesterday, “…The March 20 increase in the debt threshold signifies the first time the threshold has surpassed the $100k mark, which in itself is a milestone, however it should be noted that increases in thresholds are regularly changed in line with the base pension rate and CPI…”
Mr O’Donnell went on to say, “…Debt Agreements can be a versatile solution for people struggling with debt, however they are not a “one size fits all” debt consolidation plan and care should be taken by debtors wishing to explore this option…”
Mr O’Donnell commented that he has observed people relying on debt consolidation loans to address their debt situation, only to find themselves in further debt; “Look, a debt consolidation loan package is a reasonable option if it’s affordable, sustainable and presents a better outlook than the current state of affairs. It’s a good option if it presents a practical solution to lead someone out of their debt crisis, however in my experience, this is not always the case and more often than not a debt consolidation loan is not the silver bullet”, and “…Attitudes towards debt and debt management has changed in recent years especially since the GFC. People now have a greater awareness of the need to pay debts down…”
ASIC’s MoneySmart Website provides trusted guidance when it comes to dealing with debt and all money issues.
“…Debtors need to seek help from trusted professionals when it comes to managing money. At the end of the day, there is always a solution and if you happen to be struggling with debt, the worst thing you can do is ignore the problem and hope that it corrects itself…”
For more information, contact Debt Fix 1300 332 834 or http://www.debtfix.com.au