When it comes down to Filing for Bankruptcy in Townsville, there are a lot of choices that we get given depending on who we are, who we speak to, and exactly what has happened. One of the most common trouble I see with Filing for Bankruptcy is when it comes to choosing between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.

Two Paths

Should I consolidate my debts?

When it comes to Filing for Bankruptcy in Townsville, much of the facts you receive on this subject matter will reflect the interests of the advice giver. That is why, if you call a debt consolidation company, I can guarantee 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 each of your credit card and personal loans into a single 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 problems in Townsville can be solved by paying less interest, then go ahead and investigate the options. Even a tiny amount of interest saved over years quickly adds up.

Normally I find if you are reading this blog you’ve undoubtedly tried to consolidate your debts already and come to the following realisations like these:

– Your credit rating is no good, and your credit file already has nonpayments on it so nobody will offer you a loan, consolidated or otherwise,.

– By the time you work all of it out, you’re so far down a hole that saving a small amount of interest simply won’t make a great deal of difference,.

– You’ve probably gotten to the point where you’ve had enough, you’re emotionally worn down, you can’t go on one more day ignoring blocked calls on your phone, ignoring the demands in the mail etc.

Personal Insolvency Agreements.

So when it concerns Filing for Bankruptcy in Townsville, what’s the huge difference between a Debt Agreement and a Personal Insolvency Agreement?

Overall 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 firm that advertises on TV. Basically this process resembles Debt Agreements (DA): The trustee has a meeting with the people you owe money to and these experts negotiate a deal in your place. You can offer a lump sum settlement figure or take part in a payment plan, or you can offer them assets instead of cash. This can sound okay when it comes to the complications with Filing for Bankruptcy– that is until you realize that one of the problems with PIA’s is that 75 % of the people you owe money to will need to agree on the deal. If they don’t, your plan is denied or will need to be renegotiated.

Generally people you owe money want all their money back as well as interest. Sometimes they’ll settle for beneath the amount you owe them – it’s generally a percentage of the debt– but let me 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 truly settle for.

In most 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 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 Filing for Bankruptcy and insolvency I’ve come across creditors settling 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 smart lawyers and some very clever frameworks in place and they offer 5 % of the debt, you might take it and be grateful. Sadly, ordinary punters like you and me in Townsville 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 Filing for Bankruptcy, then feel free to get in touch with Bankruptcy Experts Townsville on 1300 795 575, or visit our website: www.bankruptcyexpertsTownsville.com.au.