1. Don’t Sign Your Life Away, be
Wary of Debt Deals
As more people are experiencing Mortgage
arrears and Credit arrears, debt agreements are
being struck across Australia, the Debt
agreement companies have been slammed by
Australia’s largest consumer law practice and
financial experts for misleading claims &
marketing tactics .

2. Also with debt consolidation responses as well,
the analysis of the internet & website marketing
of the debt agreement companies found that the
industry was rife with misleading, exaggerated or
false claims.
Analysis of the internet & website marketing of
the debt agreement companies found the
industry rife with misleading, exaggerated or false
claims.

3. PRESSURE RISING – More debt agreements are
being struck across Australia
It is expected to be a record breaking year for
these debt agreements as thousands of
Australians signs up with the trend of over 10 %
more for the 9 months to 31st
March 2013 and
according to Government statistics we are
heading to over 10,000 debt agreements in a
full year.

4. The Consumer Action Law Centre chief –
Gerard Brody was quoted “ People facing
unmanageable debt are particularly
vulnerable , are looking for hope , but giving
them unrealistic expectations is not the answer
“
They need Hope, Support and Solutions

5. Many of these Companies understated what were
the serious consequences of debt agreements,
these actually were similar in effect to full
bankruptcy as both forms of insolvency are listed on
the individual’s credit report for 7 years and for
some , entering into a debt agreement can be
financially worse than going bankrupt .
Often they are at their lowest ebb when they go to
these businesses for advice, so it is imperative that
they are given clear and more importantly, realistic
advice .

6. It is apparent that consumers are confused
about the true role of debt agreements and
many people sign up without realising the
consequences, and it is clear that they do not
properly understand the future consequences.
They often confuse them as being a Debt
Consolidation Loan, and later when it is
apparent that they can’t afford to pay them
they end up becoming bankrupt anyway.

7. There have been many problems with debt
agreements since they were introduced in 1996, and
it should be understood that there are many options
when overwhelmed by debt – a debt agreement is
only one of them.
The most obvious of these options are :
* Negotiation of hardship arrangements with
Creditors
* Debt negotiation and consolidation
* Bankruptcy

8. Financial counsellors & Debt negotiators would
recommend for many people that these as being more
beneficial than a debt agreement , in particular for
people on low income with no assets then bankruptcy is
a better option, and debt agreements should be seen as
a last resort .
Some marketing can be misleading if it only highlights
the benefits, but doesn’t tell of the severe consequences
– which are similar to bankruptcy. So it is critical to get
independent advice .

9. In recommending a debt agreement it is obvious
that there can be a conflict of interest ,as there are
Fees to set up & manage this , so there is a reward ,
perhaps seen to be preferable to advising other
options which do not generate any revenue for
them , but could be better financially for the client.
Most independent advisers avoid debt agreements
99 % of the time and seek to help people manage
their way out of debt without legally binding
agreements which may have severe future
consequences.

10. Debt agreements have their place, but in most cases can be
avoided.
The major points in this analysis were –
i. HIGHLIGHTING -negative effects of bankruptcy
ii. DOWNPLAYING – negative effects of debt agreements
iii. IMPLYING – debt agreement administrators were
balanced
iv. BEING – extremely optimistic about the level of debt
forgiveness possible with an agreement
v. IMPLYING – agreements were endorsed by the
Government
vi. IMPLYING – agreements offered ‘Financial freedom

11. It is important that consumers should be made
aware of the full implications of debt
arrangements and thoroughly investigate all
their options, including expert financial advice
when faced with serious level of debt as there
are several alternative options available.

12. DEBT AGREEMENTS - What is a debt agreement?
· It is a legally binding agreement between you and your creditors
· You offer to pay instalments or a lump sum that is often less
than
the fill amount owed ‘ All creditors receive the same % rate with
the agreement must be accepted by a majority of creditors
· A debt agreement is ‘ an act of Bankruptcy’ and you are only
released from most debts when all payments included in the
agreement are made Debt agreements are lodged with the
Insolvency Trustee Service Australia by anyone who is a registered
debt agreement administrator . Fees are charged by ITSA and the
administrator.

13. WHAT ARE THE CONSEQUENCES?
· Your name & other details are permanently appear on
the National Personal Insolvency Index , which is a public
record
Your ability to obtain further credit is affected and it can
be included in a credit agency record for up to 7 years
· Unsecured creditors cannot take any further action
against you as you are released from unsecured debts
when all payments under the agreement are made
· Secured creditors ( such as mortgages ) can still seize
and sell any asset offered as security against that debt.