A person may avoid bankruptcy by signing a formal and legally binding repayment arrangement known as a Debt Agreement or a Personal Insolvency Agreement.
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Understanding Your Debt And Personal Insolvency Options
An individual may be faced with serious personal debt but may not want to declare, or to be forced into bankruptcy. Thankfully, there are legal alternatives to bankruptcy.
Obviously, there are the informal agreements that one may make with creditors but there are also formal options under the Bankruptcy Act.
Debt Agreements and Personal Insolvency Agreements are distinguished by levels of debt and income and will usually require a debtor make a formal offer that results in a better return to their creditors than they would receive under a bankruptcy scenario.
While there may be some cost differential between these agreements and bankruptcy, there are benefits of Debt Agreements and Personal Insolvency Agreements that include:
- That repayments should be set at a level that is affordable to the debtor
- The debt can be paid over any period as agreed with the creditors
- The debt level is usually compromised or reduced to receive something less than 100 cents in the dollar
- The unpaid debt is written off once the repayments under the agreement are fulfilled
- Interest charges are usually frozen
- Bankruptcy is avoided and therefore none of the restrictions of bankruptcy apply