You can deal with unmanageable debt in other ways, if your financial situation allows it. Before you make a decision, you should review your options, such as a:
- declaration of intention
- debt agreement
- personal insolvency agreement
Declaration of intention
If you meet certain conditions, you can lodge a declaration of intention (DOI). This protects you for 21 days from unsecured creditors. During this time they can’t take further action to recover their debts. This also gives you time to consider what to do to manage your debt, if you want to avoid bankruptcy.
A debt agreement details how you will settle your debts. You can:
- pay a lump sum that may be less than the amount you owe
- repay your debt in instalments
A debt agreement can be a flexible way to come to an arrangement to settle debts without becoming bankrupt.
To make a debt agreement, the majority of your creditors (by value) will need to accept it. You must also meet certain conditions to be eligible, including having your income, assets and debt under a certain limit.
Personal insolvency agreement
A personal insolvency agreement (PIA) lets you pay off your debt in a way that suits your financial situation. It’s like a debt agreement, but your debt, income and assets don’t have be under a certain limit.
There’s a chance that you’ll end up paying more by signing a PIA than by declaring bankruptcy. Make sure you understand the consequences of each before deciding.