A recent report from the Australian Financial Security Authority has revealed debt agreements are spiraling. The quarter to September showed that more than 3000 people entered into these punitive agreements, while bankruptcies rose by a staggering 13 per cent to 4390.

A debt agreement is a financial agreement between a creditor and debtor. The agreement is a ‘last resort’ contract between the two stipulating the repayment of an outstanding loan over a set period.

Roger Mendelson. Image: www.smh.com.au

Roger Mendelson. Image: www.smh.com.au

Roger Mendelson, Chief Exectutive Officer of  Prushka Fast Debt Recovery, told news.com.au that the highest category of offenders were younger Australians.

“They tend to be younger, high-living people who invariably have a job but they are living beyond their means.”

He went on to say, “It’s very rarely homeowners because they have to be disciplined in order to get a deposit and to qualify for the loan and keep paying it.”

The debts are not for outrageous amounts (like a mortgage). Under law unsecured debts (those not backed by an asset) cannot exceed $106,561. Furthermore, debtors entering a debt agreement cannot gross more than $79,920 a year.

Even so, debt agreements are things best avoided.

“It’s with you for life,” continued Mr Mendelson. “It’s on the public record and it can impact your ability to get credit later on.”

However, debt agreements are still better than bankruptcy. Both of them will find their way onto your credit report. Both of them have severe consequences. But debt agreements give the debtor the opportunity to pay back what they owe.

About The Author

Someone you can depend on to respect you and care for your dog. Let me help you give your dog the life it deserves.

Leave a Reply

Your email address will not be published.