The young boy felt secure the entire time, and the snake had kept his word, so he agreed to take it home. He gingerly picked up the snake, brought it close to his chest, and carried him back to his home in the woods, where he left it to die. Before he could place the rattlesnake on the ground, it turned and bit him in the torso.
The child screamed and flung the snake onto the ground. ""Why, Mr. Snake, did you do that?"" Now I am certain to perish. The rattlesnake gazed up at him and grinned, saying, 'You knew what I was when you picked me up.'
Obtaining sound financial advice resembles the boy's experience in that it is fraught with risk and peril and is typically skewed in favor of the advisor. In many instances, you will be bitten if you do not know what you have taken up before proceeding. As an adolescent, I realized the problem with obtaining financial advice. I had worked diligently for several years to save a small amount of money to invest. In the early 1980s, interest rates were quite high, making investments very profitable. I spent some time researching various investment opportunities, and I met with several financial advisors. Clearly, they had more money than I did; they wore fine suits and worked in plush offices, and they all exuded confidence and seemed to have all the answers. What struck me was that they all had vastly diverse recommendations for me. This has dissuaded me from going with any of them because it has left me so perplexed.
I'm confident you've read enough on the internet to be completely unsure of what to do by now. It would likely be simpler for me to help you understand the nature of the financial reptiles you may encounter while attempting to resolve your financial issues.
My Chartered Accountant
Do I need to speak with my accountant?
If anyone knows your financial situation well, it's your accountant, doesn't it seem obvious? Nonetheless, the brief answer is an emphatic No! It's not that your accountant doesn't care about your best interests; his expertise resides in helping you save money during tax season, minimizing your tax liability, and filing your BAS.
The majority of accounting degrees devote little to no time to insolvency; it is typically taught as a postgraduate specialization course for those who wish to enter the field. Unless your accountant is an insolvency expert, he won't know much about the ramifications of filing for bankruptcy. However, I can assure you that insolvency experts know a great deal about tax returns and BAS. If you are able to locate an insolvency accounting firm, you will likely find that they are large, well-appointed firms that charge accordingly.
My Solicitor
Should I speak with my Attorney?
No! You can speak with your attorney, but it probably won't do you much good. Solicitors are exceptionally skilled at performing legal tasks, such as drafting your will, purchasing your home, and, if you're fortunate, keeping you out of court. In Australia, insolvency specialists typically have a legal or accounting background, and this is because you cannot enroll in the postgraduate program to become a qualified insolvency practitioner without a law or accounting degree.
Just as there are few insolvency accounting firms, there are few insolvency law firms in Australia, and if you do locate one, you will pay a premium for their expertise.
Debt Consolidators
Should I consider debt consolidation?
As stated previously, the majority of the advice you receive on this topic will reflect the interests of the advisor. Therefore, I can guarantee that a debt consolidation company will advise you to consolidate your debts if you contact them. The debt consolidation industry is a multibillion-dollar industry that makes money in a very straightforward manner: by charging you a fee for assisting you consolidate your credit card and personal loans into a single package.
I regret to inform you that they are not doing it for gratis. Please don't misunderstand me: if you believe that paying less interest will answer your financial problems, then investigate the available options. Even a small amount of interest accrued over a number of years adds up rapidly.
Typically, if you are reading this book, you have already attempted debt consolidation and have come to the following realizations:
• Your credit score is poor, and you already have defaults on your credit file, so no one will grant you a loan, consolidated or otherwise.
• By the time you calculate everything, you're so deep in debt that saving a little bit of interest won't make much of a difference.
• You've likely reached a point where you've had enough, you're emotionally drained, and you can't go another day disregarding blocked calls on your phone, mail demands, etc.
Financial Counselor
Should I consult a financial advisor?
Yes! There are numerous financial counselling services that can assist you with this; they have no concealed agendas and are an excellent option for assisting you in analyzing your situation. Get assistance if you find yourself perpetually stressed out, not sleeping, not eating or overeating, and preoccupied with money issues.
There are also organizations such as Lifeline that provide an excellent service. They will serve as a sounding board if you simply need someone to discuss your options with you. Don't let your financial problem destroy your existence - ultimately it's just money.
Debt Agreements
What advantages does a Debt Agreement offer?
Debt agreements, also known as Part X (ten) debt agreements, are essentially a legally binding contract between you and your creditors.
Most likely, you'll encounter similar issues as we did with the debt consolidation option, namely, creditors will quickly lose interest due to your poor credit rating. This is essentially a negotiation process in which the parties to whom you owe money discuss your expenses, income, etc. in order to come up with an acceptable repayment plan.
There are numerous businesses that provide this service, and there is a reason you see advertisements for them on television: it is a large and lucrative industry. Not only do they charge an upfront fee ranging from $800 to $4,000, but they also charge for providing information along the way and every time you pay them, they deduct a fee for the inconvenience.
You are not required to use a private company for this procedure; you can choose ITSA, the government agency established to administer to these debt agreements; however, they will take 20% of the amount agreed upon with your creditors. Therefore, if you believed that debt agreements were the answer to your prayers because they freeze interest payments and substitute them with fees, you are in for a rude awakening.
A very specific set of circumstances, which we will discuss later in this book, would be the only reason to choose a debt agreement over bankruptcy.
Individual Bankruptcy Agreements
What is the difference between a Personal Insolvency Agreement and a Debt Agreement?
The primary advantage of Personal Insolvency Agreements (PIA) is their adaptability. In addition, they are administered by a registered and regulated trustee, such as the government trustee ITSA, and not a private corporation that advertises on television. This procedure is essentially identical to Debt Agreements (DA): The trustee holds a meeting with your creditors and negotiates a settlement on your behalf. You can offer a single sum settlement amount, enter into a payment schedule, or offer assets in lieu of cash. This may sound reasonable until you realize that one of the difficulties with PIAs is that 75% of those to whom you owe money must acquiesce to the arrangement. Your proposal is rejected or must be renegotiated if they do not.
Generally, those to whom you owe money expect full repayment plus interest. People you owe money to will sometimes settle for less than the amount you owe them; typically, it's a percentage of the debt. However, due to all the variables involved in the negotiation process to put together a PIA, it is difficult to predict how much they will settle for.
In most instances, you will be required to repay the full amount owed. This is not because your creditors are wealthy or vindictive, but rather because the administrators take 20% of the amount agreed upon with your creditors. This is true whether you use a private company or ITSA, the government agency established to administrate PIAs.
On rare occasions, I've heard of creditors settling for less than 80%, but this usually only occurs when a public company goes bankrupt owing enormous quantities of money (the kind that makes the news). If you are owed $10 million and you know that the people who owe you the money have a team of smart attorneys and very clever structures in place, and they offer you 5% of the debt, you may accept it with gratitude. Unfortunately, ordinary gamblers like you and I will not be so fortunate!
Involuntary Bankruptcy
What happens if someone makes me Bankrupt?
Involuntary bankruptcy occurs when a creditor petitions the court to declare a debtor insolvent. When you receive one of these notices, you typically have 21 days to settle the entire debt. If you do not, the creditor will return to court and request that it issue a sequestration order declaring you insolvent. A trustee is appointed, and you have 14 days to file the necessary documentation before you are declared bankrupt.
You can object to a bankruptcy notice by going to court after 21 days have passed and presenting your case to prevent it from proceeding. In reality, there is no distinction between Involuntary Bankruptcy and Voluntary Bankruptcy, other than the manner in which you became bankrupt; once declared bankrupt, they are administered identically.
Nonetheless, the tension, agony, and fear that accompany this process are extraordinary. If you believe someone is likely to impoverish you, you should seek advice and follow it. In general, I've found that it's preferable to know your limitations before someone bankrupts you. Once you have declared bankruptcy, it is typically too late to recover.
Voluntary Bankruptcy
When should I contemplate declaring bankruptcy voluntarily?
This question is not the same for everyone, but one way to determine the answer is to calculate how long it will take you to pay off all of your obligations; if it will take longer than three years (the period during which you are considered bankrupt), this may help you make a decision.
A pensioner of 80 years of age once told me that her credit card statement calculated that it would take her 35 years to pay off her debt at the rate she was paying. Imagine paying one credit card bill for 35 years.
Credit rating damage can aid in this consideration. If you relocate and fail to pay your $30 phone bill for an additional six months, the phone company will likely default your credit file. This default will remain on your credit report for five years, so for $30 you can have your credit severely damaged for the duration of this time.
The ease with which companies and credit providers can default your credit file is, in many ways, unjust. In my opinion, the punishment does not seem proportional to the offense. Therefore, if you already have defaults on your credit report for 5 years, keep in mind that bankruptcy remains on your credit file for a total of 7 years before it is completely removed.
If your credit rating is a major factor in deciding whether to enter into a Debt Agreement, Personal Insolvency Agreement, or declare bankruptcy, keep in mind that they will all remain on your credit file for a total of seven years. With a DA or PIA, you must repay the funds and they will remain on your record for seven years.
The other side of the crime and punishment equation is bankruptcy, and the provisions in this country are very lenient: you can go insolvent owing millions of dollars, and after three years, there are no repercussions. In comparison to nations such as the United States, our bankruptcy laws are extremely lenient.
I do not profess to know why this is the case, but debtors were sent to prison a couple hundred years ago. The government probably believes that the sooner it can get you back to work and paying taxes, the better. It makes more sense than incarcerating you, which costs the taxpayer regardless.
Except for a few items, bankruptcy eliminates all of your debts, including those owed to the IRS.
• Centrelink Debts, Court Fines like parking and traffic fines
• HECS or Fee Help loans
• Funds to cover the costs of a car catastrophe if the vehicle was not insured.
There is much more to be said about bankruptcy, but the purpose of this chapter was to assist you in deciding between a few options. Remember the type of snake you're taking up when receiving advice. Best of success!
" - https://www.affordablecebu.com/
