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 bill payments or shopping, but you will be using your own money.

But there is the Odd circumstance whilst in your Debt Agreement that you should be aware of: 

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.  Your Debt Agreement will preclude you from borrowing from the larger Banks as you do not meet their criteria whilst in your Part IX Debt Agreement.  

If you have a Car Lease with a Balloon payment at the end, which occurs whilst your are still in your Debt Agreement 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 early 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 your Debt Agreement exclusion 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 your work life continues as normal, but be aware you must inform anyone you apply for credit with that you are in a Part IX 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 new job or new work license, it may be a good idea to check if a clean credit file is necessary first. Especially if you work in finance or security.  It pays to check and discuss this upfront with your employer, or check with your professional association.  

Your Credit Report should reset a month after the 5 year period has passed, as long as you have completed all 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 each 3 months.  If the creditors are not happy that measures have been taken to catch up on any arrears in your Debt Agreement they can apply to terminate your Debt Agreement.  All debts will be reinstated and interest can be reapplied to your balances.  

If it is a permanent problem or change in your circumstances, say a pay cut or a forced ob change, your Administrator can apply to VARY the payment plan to suit your new budget.  The new proposal will go to a vote of your 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 previous agreed 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 all your Debts.

In this case, it is generally advisable to declare Bankrupt as your Debts will start accruing Interest again.

Remember to keep in touch with your Administrator and discuss any problems you are having.  If you’ve changed your bank account or moved house, or there has been a slight glitch in your circumstances, your Administrator is there to assist you.  Money Buckets can advise who is best to speak to for any changes.