You can continue to pay your creditors during the processing period, the amount of debt included in the debt contract is the amount owed on the reference date. However, you should pay your secured creditors all the time, as these are not included in the debt contract. Financial advisors can also help you understand the impact of bankruptcy and debt contracts. There are eligibility requirements that must be met in order for the proposed debt agreement to be adopted. After submitting your proposal to AFSA, the official recipient will evaluate the proposal and verify that it meets these requirements. If the proposal is considered non-compliant with these requirements or is not in the interests of creditors, it may be rejected by AFSA. If a debt contract is an option you`re considering, you don`t have to do it alone. Disclaimer: Always consult a financial advisor before going bankrupt, as there are serious consequences that you need to understand, including that any money or else you receive (for example.B. heirs or win) while you are bankrupt, without pay. A financial advisor can also help you negotiate an informal agreement and avoid bankruptcy or a debt contract! If you are really unable to pay off your debts when they mature, you may be able to agree with your creditors to pay a reduced amount, defer certain repayments, reduce the interest rate and/or reduce your repayments. If you are in a financial emergency and cannot repay your loans (including credit cards), you may also have rights under the National Credit Code: See fact sheet: Financial emergency. Debt pacts are not used to weigh on the borrower.
On the contrary, they are used to reconcile the interests of the client and the representative and to resolve the agency problems between management (borrower) and debtors (lenders). Debt contracts are a formal alternative to bankruptcy under the Bankruptcy Act for insolvent individuals (unable to pay their debts when they mature). As part of a debt agreement, your unsecured creditors agree to accept less than the total amount of debts due in return for a commitment you made to make regular repayments for an agreed period. As of June 27, 2019, debt contracts are limited to a maximum of 3 years or 5 years during which you own or pay your home. If you are looking for ways to reduce financial stress, a debt agreement may be an appropriate procedure. However, the agreement of a debt agreement is not a measure of opportunity and it is not taken lightly by the tax authorities.