Don’t Sign Your Life Away, be Wary of Debt Deals | Debt Consolidation

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Dont Sign Your Life Away, be Wary of Debt Deals
As more people are experiencing Mortgage arrears
and Credit arrears, debt agreements are being
struck across Australia, the Debt agreement
companies have been slammed by Australias
largest consumer law practice and financial
experts for misleading claims marketing tactics
.
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Also with debt consolidation responses as well,
the analysis of the internet website marketing
of the debt agreement companies found that the
industry was rife with misleading, exaggerated or
false claims. Analysis of the internet website
marketing of the debt agreement companies found
the industry rife with misleading, exaggerated or
false claims.
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PRESSURE RISING More debt agreements are being
struck across Australia It is expected to be a
record breaking year for these debt agreements as
thousands of Australians signs up with the trend
of over 10 more for the 9 months to 31st March
2013 and according to Government statistics we
are heading to over 10,000 debt agreements in a
full year. 
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The Consumer Action Law Centre chief Gerard
Brody was quoted People facing unmanageable
debt are particularly vulnerable , are looking
for hope , but giving them unrealistic
expectations is not the answer   They need
Hope, Support and Solutions
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Many of these Companies understated what were the
serious consequences of debt agreements, these
actually were similar in effect to full
bankruptcy as both forms of insolvency are listed
on the individuals credit report for 7 years and
for some , entering into a debt agreement can be
financially worse than going bankrupt . Often
they are at their lowest ebb when they go to
these businesses for advice, so it is imperative
that they are given clear and more importantly,
realistic advice .
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It is apparent that consumers are confused about
the true role of debt agreements and many people
sign up without realising the consequences, and
it is clear that they do not properly understand
the future consequences.  They often confuse
them as being a Debt Consolidation Loan, and
later when it is apparent that they cant afford
to pay them they end up becoming bankrupt anyway. 
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There have been many problems with debt
agreements since they were introduced in 1996,
and it should be understood that there are many
options when overwhelmed by debt a debt
agreement is only one of them. The most obvious
of these options are Negotiation of
hardship arrangements with Creditors Debt
negotiation and consolidation Bankruptcy 
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Financial counsellors Debt negotiators would
recommend for many people that these as being
more beneficial than a debt agreement , in
particular for people on low income with no
assets then bankruptcy is a better option, and
debt agreements should be seen as a last resort
. Some marketing can be misleading if it only
highlights the benefits, but doesnt tell of the
severe consequences which are similar to
bankruptcy. So it is critical to get independent
advice .
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In recommending a debt agreement it is obvious
that there can be a conflict of interest ,as
there are Fees to set up manage this , so there
is a reward , perhaps seen to be preferable to
advising other options which do not generate any
revenue for them , but could be better
financially for the client. Most independent
advisers avoid debt agreements 99 of the time
and seek to help people manage their way out of
debt without legally binding agreements which may
have severe future consequences.
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Debt agreements have their place, but in most
cases can be avoided. The major points in this
analysis were i.   HIGHLIGHTING -negative
effects of bankruptcy ii. DOWNPLAYING
negative effects of debt agreements iii.
IMPLYING debt agreement administrators were
balanced iv. BEING extremely optimistic about
the level of debt forgiveness possible with an
agreement v.  IMPLYING agreements were
endorsed by the Government vi. IMPLYING
agreements offered Financial freedom
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It is important that consumers should be made
aware of the full implications of debt
arrangements and thoroughly investigate all their
options, including expert financial advice when
faced with serious level of debt as there are
several alternative options available. 
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DEBT AGREEMENTS - What is a debt
agreement?   It is a legally binding agreement
between you and your creditors   You offer to
pay instalments or a lump sum that is often less
than the fill amount owed All creditors
receive the same rate with the agreement must
be accepted by a majority of creditors    A
debt agreement is an act of Bankruptcy and you
are only released from most debts when all
payments included in the agreement are made  Debt
agreements are lodged with the Insolvency Trustee
Service Australia by anyone who is a registered
debt agreement administrator . Fees are charged
by ITSA and the administrator.
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 WHAT ARE THE CONSEQUENCES?   Your name other
details are permanently appear on the National
Personal Insolvency Index , which is a public
record          Your ability to obtain further
credit is affected and it can be included in a
credit agency record for up to 7 years  
Unsecured creditors cannot take any further
action against you as you are released from
unsecured debts when all payments under the
agreement are made   Secured creditors ( such
as mortgages ) can still seize and sell any asset
offered as security against that debt.