What Are the Key Requirements for Debt Settlement in Australia?

Australia is in a deep personal debt crisis, which has only gotten worse in the last three decades. The figures tell it all: from 1995 to 2015, the ratio of a discrepancy between household income and expenditure has widened from 104% to 212%.  It is now on top of the list of countries with the most amounts of personal debts.

With a volatile economy, a job market that follows it, and the ever-widening income inequality, more and more people fail to repay their debts in time or at all. One possible solution to keep creditors off the back is to settle on the debt. 

Settling Things Down 

Debt settlement involves negotiating with the creditor/lender to reduce, or if possible, eliminate the debt and settling on a fixed lump sum amount to pay in case of the former. Debt settlement in Australia has grown to meet the challenge of freeing people from overwhelming dues they owe, with the help of specific key requirements for it.

Allowance of Settlement

Different creditors have different rules regarding the settlement of debts. For example, banks have the ombudsman and dispute resolution scheme, which will work on your case before allowing for legal action by the bank. 

Other types of lenders have their conditions. Some might allow for settlement but not by a third-party like a debt negotiator. Others will allow third parties to settle on your behalf. Checking for all of these is crucial in order to proceed with settlement plans.

Bad Repayment History

Lenders will be willing to negotiate a settlement only if you have been unable to repay on time or have failed to do so completely. In case your recent payments have been up to date until the present date, they might consider you still capable of making payments and thus not agree on a settlement. A debt negotiator can help by studying your repayment history and giving you an edge in the talks.

Saved Lump Sum

Before agreeing on a debt settlement in Australia, you must know the amount you can settle on. When under financial duress, gathering sufficient amounts to be kept aside for this purpose is vital for a successful settlement. Some creditors can reduce the amount by up to 50%, but the general rule is to have 70% of the owed money on hand prior to negotiations. 

Getting a Debt Negotiator

If you can’t do the settlement negotiations alone, you could hire a professional negotiator to do it on your behalf. They usually come from legal backgrounds and will have the expertise to get to a good settlement. But always make sure these negotiators are from a reputable company, so you do not get hoodwinked by frauds posing as professionals.

You might be charged money for accounts not successfully negotiated upon, although they might have a policy for charging only upon successful settlement. Check the agent/agency before opting for it.

Debts can bring down a person rather swiftly and brutally, but debt settlement in Australia can save the day by smoothing out the journey to acceptable tolerance levels.