Bankruptcy in Perth - Choices, Choice, Choices

When it comes to Bankruptcy Perth, there are a number of options that we get given depending on who we are, who we speak with, and exactly what has gone wrong. 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 Perth, most of the related information you receive on this subject matter will reflect the interests of the advice giver. Therefore, if you call a debt consolidation firm, I can assure you they will tell you to consolidate your debts. The debt consolidation operation 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 one neat and tidy package.

I hate to tell you this but these guys aren't doing it free of charge. Please do not misunderstand me: if you consider your financial problems in Perth can be fixed by paying less interest, then go on and explore the options. Even a small amount of interest saved over years quickly adds up.

Usually I find if you read this blog you've probably 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 nonpayments on it so no one will offer you a loan, consolidated or otherwise,.
•       By the time you work it all out, you're so far down a hole that saving a bit of interest just won't make a lot of difference,.
•     You've quite possibly gotten to the stage where you've had enough, you're mentally worn down, 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 relates to Bankruptcy in Perth, what's the difference between a Debt Agreement and a Personal Insolvency Agreement?

Flexibility is the main point Personal Insolvency Agreements (PIA) have in their favour. They're also administered by a registered and - may I add - regulated trustee featuring the government trustee ITSA, and not a private organization that advertises on TV. Ultimately this process is similar to Debt Agreements (DA): The trustee holds a meeting with the people you owe money to and these guys work out a deal in your place. You can give a lump sum settlement figure or enter into a payment plan, or maybe you can offer them assets rather than cash. This might sound alright when it comes to the complications 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 plan is rejected or will have to be renegotiated.

Generally the people you owe money want all their money back as well as interest. Sometimes they'll go for beneath the amount you owe them - it's typically a percentage of the debt - but allow me to stress this aspect: 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.

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 come across creditors going for 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 Perth aren't going to get that lucky!

If you would like to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to call Fresh Start Solutions Perth on 1300 818 575, or visit our website: freshstartsolutions.com.au/bankruptcy-Perth.