Debt Agreements

Just wondering of there was anyone else out their who has taken out a Debt Agreement?

About a year ago we were in terrible financial situation. We were behind in payments on $28,000 worth of personal loans and credit cards (majority cc accrued from when we were young and stupid and child free that had never been paid off in full), and we were struggling to pay even the minimum mostly interest payments each month. We were up to date with our mortgage because this was always the first priority on pay day, but we were also behind on all our utilities, and I was contstantly having to make payment arrangements etc. We were both working as hard as we could, my DH was working heaps of overtime, and I was working two jobs. We were just spending on the basics, nothing more.I was slowly going insane. Every time the phone would ring I would jump expecting it to be the bank etc and sometimes wouldn't even answer the phone if we had visitors etc. We really wanted to have another baby (baby no.2), but there was no way we could afford another child, let alone me being on Maternity leave.
I had no idea what to do. We could not refinance the house as it was Fixed and their would be huge break costs and we did not yet have enough equity has we had only just built our home. We would have been in a worse situation if we sold our house because of break costs etc.
I was grasping at straws. I rang Fox Symes, and a very rude and unsympathetic lady basically told me that we were too far gone, and that there was nothing they could do to help.....
I basically then just gave up and prayed to God and told him that I couldn't handle it anymore, and I was leaving it in his hands...I felt such a sense of relief after that!
A couple of days later I was googling, and came across a site for a QLD company called Debt Mediators. They were very similar to Fox Symes, but their website was very basic, and normally I wouldn't have looked twice, but something made me call them.
I spoke to the nicest most understanding guy called Ben who did not judge me in anyway at all, and told me that there many others in worse positions than mine. We discussed our options....there was really only two options take out a DA or do nothing and probably eventually lose the house....not an option!
A DA is when a company negotiates on your behalf with your creditors to reduce payments to a level that you can afford over a certain time frame. You are registered with government agency ITSA, and are issued an insolvency number which means that the creditors can no longer chase you for payments while the negotiations are happening, and if all approved it means you no longer pay any interest on your debts, every cent you pay comes off your debt. You just make one weekly payment to this company, and they distribute the funds between creditors. DA's are normally over a 4 year period like ours (only 3 years left now for us:dance:).
There are major drawbacks. It is listed on your credit file for 7 years. To us, this wasn't an issue because we already had defaults from the credit cards, and to be honest we never, ever plan on taking out finance for anything ever again except for property, and that won't be for many more years (once the debt is paid off, there are many banks that will still lend to you, and this company helps you with that too, but obviously there would be higher interest rates etc for short period at the beginning.We have no intention of borrowing anything!) It can also affect you if you try to go to a new carrier for utilities etc, although there are ways around this.
Another very hard part of the process is when you lodge your initial application with the company. You pay them a certain amount every week for 6 weeks prior. This is for two reasons. One, this is how they make their money (but they are generally able to get your debts reduced with the banks, so it pretty much evened out!), and two, it is so they can prove to the bank that you can make repayments and stick to it. This was a horrible period because we could not afford to pay both these payments and our cc's etc, so for six weeks we did not make any payments off our debts, and I had to put up with zillions of calls from our creditors asking for money...all I could tell them was that we were applying for a da.
Anyway, we were approved and given the ITSA number....bliss, no more calls from creditors. It all went through, and we went from paying over $1100 a month in just interest to $700 a month straight off our debts...NO INTEREST! It is direct debited from our account each week, and we do not even notice it is gone. We can make extra payments whenever we like, but as suggested by the rep from the company we have been saving instead, because as it is interest free, we are better off getting some savings behind us. What a difference a year makes.

We recently welcomed our baby boy in to the world, and I am on maternity leave, and will be just going back part time. All of our utilities are up to date, we have savings, we recently bought a new ( new to us!) car and paid cash for it up front, and we even went on holidays to QLD! We are now able to look at landscaping our yard etc, which will all add value to our property.
Best of all I have peace of mind, and know we are getting somewhere, and we have well and truly learnt our lesson, a lesson I will be passing on to our kids for sure. If you don't have the money, you just don't buy it!! Period.

I just wanted to share our experience and maybe help someone that doesn't know where to turn to next. It was a stressful but worthwhile experience, and is certainly not a decision to be made lightly. It is a great feeling to know your debts are actually being paid off. In our situation it was the only option.

so you declared insolvent/bankruptcy?

Nope, not bankruptcy. We are paying back all our debts, every cent! :)., when you declare bankruptcy you do not pay back your debt.
There is a big difference between the two.
We still have our home and Our home loan remains exactly the same and is not affected by our DA at all. (I am assuming if you went bankrupt you would lose your house?), and there are no limits on how much money we can earn etc. Our credit rating would be affected in a similar way though to bankruptcy being on our credit rating for 7 years, and you are registered with ITSA as well. :)

thanks for this advice ! we were nearly going to do this but didnt quite understand this as we thought it was like bankruptcy.

DH wants to know about pre requistes ? what are they , as we have personal loans BUT they are paid on time and paid in full and all our bills are paid on time and in full , we just struggle to live , like buy food/petrol extras etc ..

so does this company just do DA or do they give finacial advice on budgeting and/or refinancing ??

would love to know more and glad you like got better x

Hi Lea, no this company also gives financial advice, and will always try and refinance first where possible. I would chat to them about your financial situation, and they would let you know what options would be best etc. They do a free assessment first. Check out their site, just google debt mediators. There are also other companies too, so maybe check them out! I know how you feel hon.:D