If you find yourself in a sticky situation with money, it may seem like a logical step to do everything in your power to avoid declaring bankruptcy. If a debt agreement is your only other option, is that really a better alternative? Here are the 6 biggest disadvantages of a debt agreement
- Public record
When you proceed with a debt agreement, your name and other details will be listed on the National Personal Insolvency Index for 5 years from the date of the agreement or 2 years after the end date, (whichever is later). Where your proposal is withdrawn, not accepted, or lapses, the information will only appear for a year.
- Your Credit
Your debt agreement is listed on your credit report for up to 5 years or longer in some circumstances which can affect your financial flexibility.
- New creditors
Once entering into a debt agreement, you will be required to tell any new creditors about it. This includes when taking on new debt or obtaining goods and services over a certain amount.
- Your Business
If you are a business owner and are trading under another name, you must disclose your debt agreement to anyone who deals with your business.
A debt agreement may prevent you from practising certain professions or being employed in positions of trust. This may ultimately affect your career advancement.
By proposing a debt agreement to avoid bankruptcy, you may end up becoming involuntarily bankrupt anyway. If you propose a debt agreement that is not accepted by your creditors, they can use the act of bankruptcy to apply to the court to make you bankrupt.
Servicing Melbourne, Sydney, and Perth, Bankruptcy Debt Help can provide you with information and comprehensive debt solutions. Contact us today.