Bankruptcy in Canberra - Choices, Choice, Choices

When it comes to Bankruptcy Canberra, there are a number of options that we get given depending on who we are, who we speak to, and exactly what has happened. Among the most common confusion I see with Bankruptcy is when it comes to choosing between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.

Should I consolidate my debts?

When it comes to Bankruptcy in Canberra, much of the info you receive on this subject matter will reflect the interests of the advice giver. Therefore, if you call a debt consolidation firm, I can guarantee 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 assisting you wrap all of your credit card and personal loans into one neat and tidy package.

I hate to tell you this but they aren't going to be doing it for free. Please don't misunderstand me: if you feel your financial troubles in Canberra could be fixed by paying less interest, then go on and check out the choices. Even a small amount of interest saved over years easily adds up.

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

• Your credit rating is not good, and your credit file definitely has defaults on it so no one will give you a loan, consolidated or otherwise,.

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

• You've likely gotten to the point where you've had enough, you're emotionally drained, you can't go on one more day ignoring blocked calls on your phone, ignoring the demands in the mail and so forth.

Personal Insolvency Agreements

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

Overall flexibility 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 business that advertises on TV. Ultimately this process is similar to Debt Agreements (DA): The trustee has a meeting with the people you owe money to and they arrange a deal in your place. You can give a lump sum settlement figure or take part in a payment plan, or maybe you can offer them assets instead of cash. This may sound fine when it comes to the issues with Bankruptcy - that is up until you realize that one of the problems with PIA's is that 75 % of the people you owe money to have to come to an understanding the deal. If they do not, your proposal is rejected or must be renegotiated.

Generally people you owe money prefer all their money back plus interest. Sometimes they'll go for less than the amount you owe them - it's generally a percentage of the debt - but let me 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 actually settle for.

In many cases 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 decideded 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 come across creditors going for less 80 % on rare occasions, but that usually only occurs with a public company entering 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 brilliant 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 Canberra aren't going to get that lucky!

If you wish to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to contact Bankruptcy Advice Canberra on 1300 879 867, or visit our website:bankruptcy-advice.com.au/Canberra .