For a debt to be covered by a debt agreement, it must be a “provocative debt.” Proven debts are debts that would be repaid if you went bankrupt. The first condition is that it must be unsecured, so immediately you can include credit cards and personal credits that are not with an asset that would be sold if you stop paying. If you are trying to include a car loan or mortgage in a debt contract, the secured creditor would still be able to sell (or sell) the vehicle or property. If there was an amount left after the sale of the asset, that amount would be technically “unsecured” and it could be included in the debt agreement. Tax debts with the Australian tax authorities are supporting, but you should keep in mind that you are not legally exempt from this debt until you have entered into your contract. This means that if you receive a tax return for the duration of your contract, it will be held by the ATO and applied to your debts to them. If you want us to give you a hand to deal with the ATO, please contact us. We have extensive experience in communicating with the ATO and its agreements. The reason for this provision is to prevent the taxpayer from claiming a deduction for debts that the taxpayer no longer has to pay. Once you paid the agreed amount, you paid that debt.
In addition, we manage all payments for you once your agreement is activated. We make payments to your creditors quarterly for the duration of your agreement with the funds you contribute to our trust account. We`ll also send you quarterly progress reports so you can see what you paid and what you still have to pay to be debt-free! A debt contract is mentioned in your credit report for at least 5 years and affects your ability to obtain other credits during this period. If you have a poor credit rating and lenders no longer give you credit, a debt contract is a way to pay off your debts earlier and improve your financial situation over time. Initially, this measure will only apply to businesses with Australian business numbers and tax debts in excess of $10,000, which is at least 90 days late. Financial advisors can also help you understand the impact of bankruptcy and debt contracts. Bankruptcy is the formal process that they are declared unable to pay your debts. If you suffered a tax loss before bankruptcy (perhaps from operating a business or negative investment property) or before the Bankruptcy Act releases you from debt, you cannot deduct that tax loss in any year of income after bankruptcy or discharge.