Bankruptcy in Melbourne - Choices, Choice, Choices

When it comes down to Bankruptcy Melbourne, there are a bunch of choices that we get given depending on who we are, who we speak with, and what exactly has gone wrong. The most common trouble I see with Bankruptcy is when it comes to choosing 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 will reflect the interests of the advice giver. Therefore, if you call a debt consolidation company, I can assure you they will tell you to consolidate your debts. The debt consolidation industry is a multi-billion dollar industry making money in one very straightforward way: charging you a fee for aiding you wrap each one of your credit card and personal loans into a single neat and tidy bundle.

I hate to tell you this but these people aren't doing it free of charge. Please do not misunderstand me: if you think your financial issues in Melbourne may possibly be solved by paying less interest, then go on and explore the possibilities. Even a little amount of interest saved over years easily adds up.

Typically I find if you read this blog you've most likely tried to consolidate your debts already and come to the following realisations such as these:

• Your credit rating is no good, and your credit file definitely has nonpayments on it so nobody will offer you a loan, consolidated or otherwise,.

• By the time you work all of it out, you're so far down a hole that saving on a small amount of interest simply won't make a lot of difference,.

• You've most likely gotten to the point where you've had enough, you're emotionally exhausted, you can't go on yet another day ignoring blocked calls on your phone, ignoring the demands in the mail etc.

Personal Insolvency Agreements

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

Flexibility is the main thing Personal Insolvency Agreements (PIA) have in their favour. They're also administered by a registered and - might I add - regulated trustee including the government trustee ITSA, and not a private organization that advertises on TV. Essentially this process is similar to Debt Agreements (DA): The trustee has a meeting with the people you owe money to and these guys mediate a deal on your behalf. You can give a lump sum settlement figure or take part in a payment plan, or perhaps you can offer them assets rather than cash. This may sound alright when it comes to the problems with Bankruptcy - that is until you realise that one of the obstacles with PIA's is that 75 % of the people you owe money to must come to an understanding the deal. If they do not, your plan is denied or will have to be renegotiated.

Generally people you owe money really want all their money back and also interest. Sometimes they'll opt for under the amount you owe them - it's normally 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 truly settle for.

In many 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 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 opting for 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 want to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to get in touch with Bankruptcy Advice Melbourne on 1300 879 867, or visit our website: bankruptcy-advice.com.au/Melbourne .