Bankruptcy in Hobart - Choices, Choice, Choices

When it comes to Bankruptcy Hobart, there are a ton of options that we get given depending on who we are, who we talk to, and exactly what has happened. One of the most common confusion I see with Bankruptcy is when it comes to selecting between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.

Should I consolidate my debts?

When it comes to Bankruptcy in Hobart, most of the related information you receive on this subject will reflect the interests of the advice giver. Therefore, if you call a debt consolidation provider, I can guarantee you they will tell you to consolidate your debts. The debt consolidation business is a multi-billion dollar industry making money in one very simple way: charging you a fee for aiding you wrap each one of your credit card and personal loans into just one neat and tidy package.

I hate to tell you this but these people aren't doing it free of charge. Please don't misunderstand me: if you think your financial problems in Hobart can be fixed by paying less interest, then go on and explore the choices. Even a small amount of interest saved over years easily adds up.

Normally I find if you read this blog you've undoubtedly attempted to consolidate your debts already and come to the following realisations similar to these:

• Your credit rating is no good, and your credit file already 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 on a tiny bit of interest simply won't make a great deal of difference,.

• You've very likely reached the point where you've had more than enough, you're emotionally burnt out, you can't go on yet another day ignoring blocked calls on your phone, ignoring the demands in the mail and so forth.

Personal Insolvency Agreements

So when it comes down to Bankruptcy in Hobart, what's the huge difference between a Debt Agreement and a Personal Insolvency Agreement?

Adaptability is the main point Personal Insolvency Agreements (PIA) have in their favour. They're also administered by a registered and - might I add - regulated trustee featuring the government trustee ITSA, and not a private agency that advertises on TV. Essentially this process resembles Debt Agreements (DA): The trustee has a meeting with the people you owe money to and they work out a deal on your behalf. You can offer a lump sum settlement figure or enter into a payment plan, or perhaps you can offer them assets as an alternative to cash. This might sound alright when it comes to the complications with Bankruptcy - that is until you realise that one of the difficulties with PIA's is that 75 % of the people you owe money to need to come to an understanding the deal. If they don't, your plan is denied or will need to be renegotiated.

Generally the people you owe money really want all their money back in addition to interest. Sometimes they'll go for less than 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 really 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 Bankruptcy and insolvency I've heard of creditors choosing less 80 % on rare occasions, but that usually only occurs with a public company entering 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 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 Hobart 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 Bankruptcy, then feel free to get in touch with Bankruptcy Experts Hobart on 1300 795 575, or visit our website:bankruptcyexpertsHobart.com.au.