Suppose you have an unsecured debt totalling $35,000 and you can afford to offer $125 per week to your creditors for 260 weeks, or $32,500. If the creditors accept your proposals, they also appoint us with the management of your debt contract and accept that we can keep part of the repayment for the contract management work. The amount we withdraw will be deducted from the $32,500 and it is not an additional amount or extra you pay. A debt contract (also known as Part IX Debt Agreement) is a formal way to settle most debts without going bankrupt. Only demonstrable unsecured debts, such as medical bills, memory cards, credit cards and some private loans, can be included. Once a debt contract has been accepted by your creditors, it becomes a legally binding agreement. You must start with the repayment, which is stipulated in the agreement from which your creditors receive dividends. While the agreement is in effect, the interest on your unsecured debt will be frozen and no enforcement action can be taken against you or your property. Once the terms of your debt contract have been signed, you will be free of any unsecured debt included in the agreement.
But the fine print paints a more complex picture. A debt contract is also a form of bankruptcy. It affects your credit rating for up to five years and can affect your ability to apply for specific jobs. Refunds can be high and the company calculates its own juicy fees. Veda Advantage and Dunn and Bradstreet and other credit bureaus can use NPII information to inform all creditors that you are a party to a debt agreement. A creditor can register a default against your name with one of the two credit banks before acceptance. Your debt contract remains in your credit file for 5 years from the date of entry and may affect your ability to obtain credits during that period. Fox Symes is the largest provider of debt contracts in Australia, but earlier this year they were fined by ASIC, the financial watchdog, for misleading statements in their advertising.
Fox Symes – Associates Pty Ltd and its directors Tim Maher and Deborah Southon made commitments against the Federal Court of Justice as part of a settlement of action by the Australian Competition and Consumer Commission.