Well, life proceeds pretty much as normal without the Stress and Hassle. Your payments will continue to come out of your account and automatically stop when the agreed Debt Agreement amount is reached.
You won’t be able to borrow money for 5 years, so don’t ask, but we suggest you set up a VISA Debit card, so you can still have the convenience of a card for online payments or shopping, but you will be using your own money.
But there is the Odd exception.
If you have a Home Loan and need to refinance or buy and sell again, you may be able to do so if you payout the Debt Agreement with the new Loan or Sale of the house. But it won’t be with a Bank, it will be with one of our specialist Lenders.
If you have a Car Lease with a Balloon payment at the end, you may be able to refinance the balloon payment with the Lender. This is not a guarantee, but with permission from the Trustee, Good payments having been maintained on the Debt Agreement and Car Lease, some Lenders will allow this.
If your circumstances change and you earn extra money, that’s all good. You get to keep the extra money. You can pay out the Debt Agreement if you so choose, but it is not compulsory.
Paying the Debt agreement out early will allow Home Loans and Car Loans to be applied for from a specialist Lender. But at this stage, we do not know of any Credit Card or Personal loan companies that will do loans until the 5 years have passed and it has dropped off your credit report.
You can still travel overseas without issue so nothing changes there.
If you are a Director of a company Life continues as normal, but be aware you must inform anyone you apply for credit for that you are in a Debt Agreement. Best and legally necessary to do that upfront as they will see it on your credit report anyway. You can then have a chance to explain your circumstances.
If you are applying for a Job or new work license, it may be a good idea to check if a clean credit report is necessary first. Especially if its in the finance or security area. It pays to check and discuss this upfront with your employer.
Your Credit Report should reset a month after the 5 year period has passed, as long as you have completed the payments. This should then give you a fresh clean start.
Remember you do not have to have a loan or card to have a good credit report, so don’t go out and get a loan just for the sake of it. Also remember that loans from Fast Money, High Interest Pay Day Lenders are virtually equivalent to having a credit Default on your credit report. If Banks or Finance companies see these on your credit report, they may not lend to you.
What if your circumstances change for the worse?
If you cannot pay a Debt Agreement payment you should contact your Administrator straight away and make arrangements to catch up at a later date. Your Administrator will work with you on this. It is vitally important that you stay in contact and be available for calls through this period as a report must be sent to all creditors on what is happening on Late Payments every month. If the creditors are not happy they can apply to terminate the Agreement if there is no communication.
If it is a permanent problem or change, say a pay cut or a forced Job change, your Administrator can apply to vary the payment plan to suit your new budget. The new proposal will go to a vote of Creditors. There will have to be a change in your Financial circumstances to justify this and there will need to be 50% of the value of the vote agree to change it. If they vote no you will have to maintain the normal payment. If that is not possible you can also choose to terminate the Debt Agreement and Declare Bankrupt.
If you do not make a payment to your Debt Agreement for 6 months it will automatically be terminated and your Debts will return with Interest. There will also be another default put on your credit report and Creditors will resume chasing you for the Debt.
In this case, it is generally advisable to declare Bankrupt as the Debts will start accruing Interest again.
Customer Enquiries: 1800 825 010
Admin Office: 0243696287
Post: PO Box 6100, Kincumber, NSW, 2251
Money Buckets ™ is a Trademark of Starlight Home Loans T/as Fast Debt Help
ABN: 94 145 613 056
Credit Lic 388809
MFAA membership 319292
Affiliates: Second Step Administration RDAA 1668
The Rite Place Pty Ltd trading as Debtrite