Frequently Asked Questions
Debt Management Plan (Scheme
of Arrangement)
What
is a Debt Management Plan?
A
Debt Management Plan (also known as a Debt Management Program or Scheme of Arrangement) is
a simple process whereby you and your creditors
voluntarily enter into a contract to help you to restructure, or
reduce the amount that you owe them, and the time period over
which you will pay them.
This can
allow you to clear all
outstanding debts without
obtaining further credit. Our
debt advice consultants
and debt advisors
deal directly with your creditors and negotiate on your behalf,
freezing interest and charges whenever possible.
This is a very responsible approach as
it gives your creditors peace of mind that you will repay them
in a manner that you can afford. However, if
for any reason all your creditors do not accept the agreed
amount, then there may still be other options available to you
(see FSA below).
How
do I start Debt Management?
An experienced
debt management consultant
creates a proposal on your
behalf, which they will then submit to your creditors. They will
then negotiate with them to get agreement on your proposal, in
order to
overcome your debt problem.
Why should my creditors agree my Debt Management Plan?
Most creditors understand that by
agreeing to your
debt management plan
they will probably receive more
money over a shorter time period, than if they reject it. This
allows them to avoid expensive legal costs in
chasing bad debts,
and enables them to engage in the process of getting paid in a
more proactive way. Also, they are more likely to receive more
money, than if you entered bankruptcy.
Formal Scheme of Arrangement
(FSA)
What is an
FSA?
A
Formal Scheme of Arrangement is an agreement arranged between
you and 60% of your creditors that is then imposed on all other
creditors by a High Court Judge. This can be of benefit in more
extreme cases, where the level of debt is considerable.
Who
can enter a FSA?
When 60% of your
creditors agree to enter the proposed arrangement, and you can
get an underwriter to put it is place, you are eligible to enter
a Formal Scheme of Arrangement.
How can I arrange an FSA?
You must
complete a petition for the protection of the Court and an affidavit that sets out the background
of your financial affairs and the reasons you have financial
difficulties. Our team of consultants can prepare this on your
behalf. It is vitally important that you disclose all
information that may be relevant to your application, otherwise
you may be refused assistance.
How can an FSA help me?
Once your FSA is
completed, you and your creditors are all bound
by its terms. This can give you great peace of mind and
financial clarity moving forwards.
-
Once your FSA is completed your creditors
can no longer bombard you with worrying letters and phone
calls.
-
FSA should have far less impact on your
day to day lifestyle, and
in most cases should not affect your professional status.
-
Even if 40% of your creditors vote against the FSA,
they are still bound by it.
-
Unlike with bankruptcy, you can
still trade and do business during the term of your FSA. You are
also able to
decide which type of assets you can provide to your
creditors.
-
FSA’s are not advertised in
publically accessible media, such as newspapers and
magazines.
Why should my creditors agree to an
FSA?
Most creditors should accept your FSA,
in a manner which is fair and equitable to them. Creditors
generally understand that you are eliminating your debts in the
fairest and most responsible way.
With an FSA,
your creditors could receive more money than
they would if you entered bankruptcy. As administration costs
are lower in an FSA compared to bankruptcy, more funds
should be available for payments to creditors.
Apply for
Debt Management
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