Bankruptcy in Darwin - Choices, Choice, Choices

When it comes to Bankruptcy Darwin, there are a load of choices that we get given depending on who we are, who we approach, and what exactly has happened. Among the most common confusion 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 Darwin, a lot of the information you receive on this issue will reflect the interests of the advice giver. That is why, if you call a debt consolidation firm, I can assure you they will tell you to consolidate your debts. The debt consolidation industry is a multi-billion dollar industry making money in one very straightforward way: charging you a fee for aiding you wrap all of your credit card and personal loans into just one neat and tidy package.

I hate to tell you this but they aren't going to be doing it free of charge. Please do not misunderstand me: if you believe your financial troubles in Darwin can be fixed by paying less interest, then go ahead and look into the possibilities. Even a tiny amount of interest saved over years quickly adds up.

Usually I find if you read this blog you've undoubtedly attempted to consolidate your debts already and come to the following realisations like these:

• Your credit rating is not good, and your credit file definitely has defaults on it so not a single person will give you a loan, consolidated or otherwise,.

• By the time you work all of it out, you're so far down a hole that saving on a bit of interest simply won't make a great deal of difference,.

• You've undoubtedly reached the stage where you've had enough, you're emotionally fatigued, you can't go on another day ignoring blocked calls on your phone, ignoring the demands in the mail and so forth.

Personal Insolvency Agreements

So when it comes to Bankruptcy in Darwin, what's the difference between a Debt Agreement and a Personal Insolvency Agreement?

Adaptability is the main thing Personal Insolvency Agreements (PIA) have in their favour. They're also administered by a registered and - might I add - regulated trustee including the government trustee ITSA, and not a private company that advertises on TV. Basically this method is similar to Debt Agreements (DA): The trustee holds a meeting with the people you owe money to and these experts work out a deal on your behalf. You can offer a lump sum settlement figure or take part in a payment plan, or maybe you can offer them assets as an alternative to cash. This may sound acceptable when it comes to the issues with Bankruptcy - that is up until you discover that one of the difficulties with PIA's is that 75 % of the people you owe money to will need to agree on the deal. If they do not, your proposal is denied or will need to be renegotiated.

Generally people you owe money want all their money back plus interest. Sometimes they'll go for under the amount you owe them - it's generally a percentage of the debt - but allow me to 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.

Most of the time you'll have to pay back 100 % of the debt owed. This is not just because your creditors are greedy or have a mean streak, it's because the administrators take 20 % of whatever is agreed 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 heard of creditors choosing less 80 % on rare occasions, but that usually only occurs with a public company going 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 clever 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 Darwin aren't going to get that lucky!

If you want to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to get in touch with Bankruptcy Advice Darwin on 1300 879 867, or visit our website:bankruptcy-advice.com.au/Darwin .