Pay Off Your Debt

Depending on your circumstances, your financial counsellor may be able to negotiate a debt reduction settlement with your creditors. Under a debt reduction settlement, a creditor may agree to reduce the amount you owe or the level of interest payable in return for a promise that you will pay off the reduced amount at specified terms.  It is important to remember that these are privately negotiated agreements and will be legally binding on you. Negotiating a debt reduction settlement may be an alternative to filing for bankruptcy or negotiating debt agreements or personal insolvency agreements under the Bankruptcy Act 1969.

Under a debt reduction settlement, the debt is generally resolved within one to three years, with creditors settling for between 20 and 80 percent of the original debt. After you pay the agency fees and settle the debt, you will see an average of 40 percent in savings.

However, watch out for agencies that promise to reduce your debt by very large amounts or promise much lower repayments. Many of these are not reputable and unlikely to deliver. Remember, as with debt consolidation loans, if it sounds too good to be true it probably is.