INFORMAL ARRANGEMENTS

What Are Debt Cutter’s Fees And Charges For An Informal Arrangement?

There are three stages in the Informal Arrangement process at Debt Cutter.

Free Phone Consultation

The first stage is the free phone consultation to assess your situation and make sure you are clear on what it is all about, there are absolutely no charges for this discussion.

Set Up Phase

The Informal Arrangement set up fee is based on each individual’s situation, their level of debt and number of creditors. The setup fee can range from $550 to $4500. To get a quote and to find out more please give one of our friendly consultants a call on 1300 887 211. If you are uncertain if this is the best path for you, we recommend getting a Get out of Debt Action Plan consultation.

Administration Phase

If we are successful at negotiating an arrangement that you accept with your creditors. There is a weekly administration fee starting at $19.50 that is charged based on number of debts and size of debt. This is for the management of your creditors and your payments over the period of the agreement. You only need to pay one amount to us and we deal with the creditor payments on your behalf.  Find out more about Informal Arrangements here.

What Type Of Debts Do We Handle?

We can negotiate an Informal Arrangement for most “unsecured” debts (which are not secured by an asset). These debts include credit cards, unsecured or personal loans, store cards, debt owed after repossession, disconnected utility bills, phone bills and accounts in collections.

Secured debts have special requirements around what can be put into an Information Arrangement. Please contact one of our consultants and have a chat about your debts to see what can be included on 1300 887 211.

How Long Does It Take To Pay Off Debts?

It is dependent on how much debt you have but usually Informal Arrangements are negotiated on a 3-6 month term, which can be extended. We assess each person individually as each situation is unique. It usually takes about 5 weeks to set up an Informal Arrangement once we have all the required information on your debts. The time it takes to clear a debt is mainly dependent on your financial situation and what you can afford.

Will This Stop Creditor Harassment?

Once Debt Cutter brokers an Informal Arrangement on your behalf, we act as your authorized representative. During the negotiations and your agreement creditors will contact us as your administrator, as we will be managing payments. Therefore you do not need to deal with creditor demands.

DEBT AGREEMENTS

What Are Debt Cutter’s Fees And Charges For A Debt Agreement?

There are three stages in the Debt Agreement process at Debt Cutter.

Free Phone Consultation

The first stage is the free phone consultation to assess your situation and make sure you are clear on what it is all about, there are absolutely no charge for this discussion.

Set Up Phase – sliding scale fee

The next stage, once you decide that a Debt Agreement is suitable for you, is called the set up phase. A Consultancy Fee is charged for this phase. During this phase Debt Cutter work through all the paperwork with you, review your budgets and put a proposal together for the creditors to vote on. The fee charged during this time is on a sliding scale subject to the amount of unsecured debt you have and what your estimated repayments would be during a Debt Agreement. This gives us an opportunity to ensure your budget estimates are correct as they are what you will experience through the debt agreement.

The fee generally ranges from $600 to a maximum of $2520, this includes a $200 Australian Financial Services Authority (AFSA) fee. This fee is generally paid over 12 weeks unless you need to fast track (5 of which your debt agreement will be in voting with the Creditors). This also gives the creditors some confidence that you are serious about the Debt Agreement.

Administration Phase – fees and charges paid by Creditors

The final stage, is the debt agreement period. Once in a Debt Agreement you only ever pay the amount that you agreed is affordable based on the budget you set out in the Debt Agreement. This payment is made weekly, fortnightly or monthly. This is the amount you offered to your creditors in settlement of the debt.

The fees and charges paid to the Administrator (administration fee) and the Government (realisation fee) are paid from that amount. There are no additional fees to what was agreed. What happens is the creditors agree to meet the fees and charges from what you offered to them. This works for them (the Creditors) as the Administrator is responsible for collecting payments, making all the reports to the Australian Financial Securities Authority (AFSA) and making distributions to the Creditors, on your behalf, over the term of the Debt Agreement.

What Type Of Debts Do We Handle?

Most “unsecured” debt ie debt not secured by an asset. These debts include credit cards, unsecured or personal loans, store cards, debt owed after repossession, disconnected utility and phone bills and accounts in collections.

What Type Of Debts Can’t We Handle?

Secured loans ie house mortgage and rentals or rent/buy. Currently connected utility bills or phone bills and current rent are not eligible. If you are unsure, please call and we can clarify for you.

How Long Does It Take To Pay Off Debts?

It is dependent on how much debt you have but usually debts are paid over 3-5 years. We assess each person individually as each situation is unique. It usually takes about 5 weeks to set up a Debt Agreement. The time it takes to clear a debt is mainly dependent on your financial situation and what you can afford. Consultancy staff will be happy to review your situation and give you an estimate of your payments.

Will This Stop Creditor Harassment?

Once Debt Cutter sets up a Debt Agreement we act as your authorised representative and we negotiate with the creditors on the client’s (your) behalf. During the negotiations creditors may still contact a client (you) but once the Debt Agreement has been accepted they have no need to contact the client (you).

Why Would I Choose A Debt Agreement?

A Debt Agreement is empowering option for those who have hit the wall financially and have exhausted their options. Life doesn’t always work the way we planned and a Debt Agreement provides a way out of a debt crisis. Read about the many success stories that attest to this experience on the Debt Cutter Success Stories page.

In brief, a Debt Agreement can freeze legal action and freeze interest on your unsecured debts. It is an option for people who are overstretched financially, want to protect their assets like their home or car and don’t want to go bankrupt. A Debt Agreement is facilitated by a registered Debt Agreement Administrator who approaches the creditors on behalf of the debtor with a repayment plan based on what the debtor can afford. If approved, the debtor then makes one regular payment to Debt Cutter (the Administrator of the Debt Agreement) who then regularly disburses the funds to creditors.

To date this has been the salvation for thousands of Australians whose only other option was bankruptcy.  Read more about Debt Agreements here.

EFFECTS OF DEBT

Why Shouldn’t I Just File Bankruptcy?

Bankruptcy is an extreme option, which has long-term effects on your credit and can often have negative results in many other aspects of your everyday life. Bankruptcy is considered a last-resort option. On our how we help Avoid Bankruptcy page we take a look at how Debt Agreements may be an alternative option for those considering bankruptcy , particularly if you want to maintain control of your own finances and keep your assets. If you are considering bankruptcy it may be worth contacting Australian Financial Security Authority (AFSA) on 1300 364 785. You can then discuss with them the pros and cons of this option or review the AFSA website.

I’m Interested In Debt Consolidation. What’s The Next Step?

All of Debt Cutter debt solutions involve consolidating payments into a simple payment plan.  For example, It is possible to consolidate your repayments utilising the Debt Agreement process. However, this is not a debt consolidation loan process and needs to be considered in the light of that. This is discussed further on the how we help Consolidate Payments page or speak to one of our friendly Debt Cutter consultants on 1300 887 211 or complete our enquiry form. A Debt Cutter consultant will give you a call back to discuss your situation at greater length. At that time, the consultant can determine if a debt agreement is the right solution and give you all the information needed.

We recommend our Debt Action Plan consultation if you are unsure of the best action to take to tackle your debt, during this consultation we take a deep look at your situation and what you are trying to resolve and outline the strategies available to you.  These may include debt consolidation loans but also consider other options that you may not have considered at this point.

YOUR CREDIT FILE EXPLAINED

What Is A Credit File?

Credit reporting agencies hold credit related information on a document known as a credit file which is used by credit providers such as banks, building societies, finance companies, utilities and phone/internet providers when assessing your application for credit. You may have a credit file if you have applied for or used credit.

Your credit score is a summary of the information on your credit report. It is what creditors use when they are assessing your credit application. VEDA score will be a number between 0-1200. To access your credit score go to www.veda.com.au

Note: There are a number of other credit agencies who have their own reporting methods.

You can find more information about your credit score and credit file in the Debt Help Advice Centre.

What Is On My Credit File?
  • Personal information (name, addresses, any companies you have been director of, etc.)
  • Loan/credit enquiries and applications over the past 5 years
  • Serious debts and credit infringements, overdue accounts (over 60 days late), court judgments
  • Bankruptcy and Debt Agreement data
  • From the 12th March 2014, “good” information can be included, including monthly repayment history on credit accounts, mortgages etc. This will show if you have met your regular commitments on time or not
  • Dates your accounts were opened and closed, credit limit of credit cards
  • Credit Score which is used by lenders when assessing your credit application

Find out more on our Credit Files Explained page.

Why Should I Get My Credit File?

Your credit file is your credit reputation. (You are entitled to check your credit report for free once a year. If you want to see it quickly, there may be a charge involved). Checking your credit score will:

  • Ensure accuracy of your credit information – update personal details and check if there is any inaccurate information on your file
  • See how the creditors view your eligibility for credit
  • Avoid trouble for future credit applications. Do your homework in regard to loans before you apply. Too many applications may indicate to creditors that you are too high a risk.
  • Credit fraud. Checking your credit file for any information that you know is not yours. Let your creditors know if there is any suspicious activities in your accounts.

Read More about Tips on managing your credit file and recovering from bad credit.

What Type Of Debts Do We Handle?

Most “unsecured” debt ie debt not secured by an asset. These debts include credit cards, unsecured or personal loans, store cards, debt owed after repossession, disconnected utility and phone bills and accounts in collections.