If you have experienced financial difficulties, you know that you could spend a huge amount of time on worrying while trying to deal with these situations. It often feels like you are alone and isolated and not sure which way to turn. Some companies can help you no matter what financial situation you are in, and if you are unable to get a consolidation loan, you may need to think about creating a debt agreement with your creditors. However, this solution is not always the best for everyone as there may be other methods more suited, and there are also consequences when you take out this type of loan.
What Is A Debt Agreement?
A debt agreement can also be known as a part 9 debt agreement and is when you agree with your creditors to pay back a specified amount of money each month until the debt is ultimately settled. Using this method is often a better choice than going bankrupt, which can have many after effects for some years which will follow you in your credit history.
How Does A Debt Agreement Work?
The first thing that you will need to do is get a debt administrator. Rather than pay all of the companies individually each month, you will make a single payment to them instead. You will need to negotiate the percentage of the debt that you can afford to pay each company, which can take some going back and forth before they will agree. Once the payments have been settled, and the agreed amount has been paid in full, the agreement then terminates, and your creditors cannot chase you for the rest of the money that was owed on the initial debt, before the agreement.
The Downside Of A Debt Agreement
When you take out a debt agreement, it can have a severe impact on your ability to get credit. The agreement will be marked on your credit history for a specific period, and until this is removed getting access to credit may prove difficult. The information is held on a public registry and after the set date will then be removed. After this, it will still take you time to build up your credit rating again before you can get credit.
Get Some Advice
Before you look at the prospect of taking out this type of debt agreement you should first get some professional financial advice and not rush into any decisions.
Make sure that you exhaust all other options before you are forced to take out a debt agreement, but it is a much better solution than going bankrupt. There are many companies that you can speak to with regards to creating this sort of agreement, and there will be a charge for the service. However, once you have an agreement in place and you are paying a manageable amount of money each month, you will soon feel the pressure ease from you.
Thanks for stopping by today, you can find my other money related posts here.
*This is a collaborative post