Bankruptcy in Melbourne - Choices, Choice, Choices

When it comes down to Bankruptcy Melbourne, there are a load of choices that we get given depending upon who we are, who we approach, and what exactly has gone wrong. Among 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 Melbourne, most of the facts you receive on this subject matter will reflect the interests of the advice giver. Therefore, if you call a debt consolidation provider, I can promise 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 one neat and tidy bundle.

I hate to tell you this but these guys aren't going to be doing it for free. Please do not misunderstand me: if you consider your financial issues in Melbourne might be fixed by paying less interest, then go on and explore the possibilities. Even a tiny amount of interest saved over years quickly adds up.

More often than not I find if you are reading this blog you've most likely attempted to consolidate your debts already and come to the following realisations like these:

• Your credit rating is no good, and your credit file definitely has nonpayments on it so not a single person will give 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 little bit of interest simply won't make a lot of difference,.

• You've most probably arrived at the point where you've had enough, you're emotionally fatigued, you can't go on another day ignoring blocked calls on your phone, ignoring the demands in the mail etc.

Personal Insolvency Agreements

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

Freedom 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 organization that advertises on TV. Basically this method resembles Debt Agreements (DA): The trustee holds a meeting with the people you owe money to and they mediate a deal on your behalf. You can give a lump sum settlement figure or enter into a payment plan, or maybe you can offer them assets as an alternative to cash. This can sound fine when it comes to the issues with Bankruptcy - that is until you realize that one of the problems with PIA's is that 75 % of the people you owe money to have to agree on the deal. If they don't, your proposal is denied or needs to be renegotiated.

Generally the people you owe money prefer all their money back in addition to interest. Sometimes they'll settle for beneath the amount you owe them - it's generally a percentage of the debt - but allow me to 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 in fact settle for.

In many cases you'll have to pay back 100 % of the debt owed. This is not because your creditors are greedy or have a mean streak, it's because the administrators take 20 % of whatever is decideded 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 come across 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 wise lawyers and some very clever structures in place and they offer 5 % of the debt, you might take it and be grateful. Sadly, ordinary punters like you and me in Melbourne aren't going to get that lucky!

If you would like to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to contact Bankruptcy Experts Melbourne on 1300 795 575, or visit our website:bankruptcyexpertsMelbourne.com.au.