Debt Agreement or Bankruptcy?? Help Please!

I’m currently 27 years old, recently just came out of a long term relationship, lost my job, moved interstates to QLD Australia to be with family. Went through an extremely depressive stage, admitted into a psych hosp from sucidial attempts and now I’m finally getting back on my feet. I started a new degree but I’m left in a really bad financial situation with about 50k in cc debts and I have no idea what to do. I know this is entirely my fault and I’m trying my best to start life over again but I don’t know what’s the best solution.

I don’t plan to buy a home for at least 5-10 years and am considering even getting a tiny home one day so I’m not too worried about my credit ratings with banks because I DEFINITELY dont want to get another cc after all this again..

My concern is will bankruptcy affect my chances of working in a youth justice role? I’m studying criminoloy and criminal justice, hoping to be able to become a youth development program officer one day and I’m worried this might affect my jon application. Also, if I ever decide to study law, would it affect my bar exam?

If I choose to do the debt agreement, has anyone ever done this and how does it work? Is there usually a rough percentage of what they will accept?? I’m not working right now, studying full time so I don’t know how much I would be able to repay weekly even if I seek govt assistance.

Any help or advice would be much appreciated!! Thank you

Comments

  • +5 votes

    In a purely third party perspective, you incurred those debts, used the money, and gained the benefit of your spending. My view is that your moral responsibility is to repay it.

    As to what's best for you in a purely self interested and selfish perspective…

    • -1 vote

      I agree with the OP needing to take their own responsibility but it also makes me wonder about the morality in banks allowing people to borrow so much more that they can manage. I've seen this happen to so many people and banks are obviously doing their best to be profitable for their own selfish reasons too. So, if both ends are just doing what's in their best interest.. Where does morality sit?

      •  

        allowing people to borrow so much more that they can manage.

        Zero. Zero moral culpability unless you're talking about developmentally challenged people.

      •  

        One need to do the right thing for the greater good.

        If they believe so.

        If not, do what's in your best interest and rest will do the same either it's individual or entity. We will be living in the mean world.

        Having said above, if you go repayment options.. it's not hard to pay it back. It will take time and in the end you will be more responsible person and earn self esteem, achievement and pride. I personally think it's tough path, bit you will be the winner in the long run.

        Get free legal advise from your respective region bodies and go from there

    • +4 votes

      This is terrible advice. Look for useful advice here - https://caxton.org.au

  • +2 votes

    Interesting as I always wondered how bankruptcy works in Aus.

    For details on consequences

    https://www.afsa.gov.au/insolvency/cant-pay-my-debts/consequ...

    Looks like theres a possibility it my affect your income and you may need to pay parts back either way?

    https://www.afsa.gov.au/insolvency/cant-pay-my-debts/income-...

    The first link does say:

    There may also be some restrictions on your employment and running a business.

    So it seems like while bankrupcty itself doesn't pose restrictions on jobs, but particular industries and authorities might, a list is available on the link below, but looks like its best to maybe anonymously ask your professional authority for your job area?

    https://nginx-afsa-feature-content-backup.govcms.amazee.io/i...

  • +1 vote

    Do your best to enter an arrangement to pay it off. I have been in a 'similar' not the same circumstance, and it amounted to the $20k mark - mine was not drug or psychological related though. It's never right to renig on responsibilities, come to a middle ground with the financial institutions and just chip away at it over the next 5-10 years. You will feel much better about this as an individual, likewise paying it off is an accomplishment and sign of your tides turning and you are setting yourself a great foundation for the future in your integrity. Get your self a job and work/study so you can achieve this, it is very easy to balance work with study.

    Do your best to refinance this into 1 payment that goes out weekly monthly as opposed to multiple little CC debts with multiple payments, negotiate a fair rate of interest and then just start chipping away.

  • +5 votes

    Avoid bankruptcy.

    We don't know what our futures hold, and its best not to limit any future opportunities.

    All the best getting back on ur feet.

  • +1 vote

    I don’t plan to buy a home for at least 5-10 years

    If you go bankrupt you might find it hard to get a loan from a bank even in that timeframe. Given that in at least 5 years you might only just out of getting your degree.

    My concern is will bankruptcy affect my chances of working in a youth justice role? I’m studying criminoloy and criminal justice, hoping to be able to become a youth development program officer one day and I’m worried this might affect my jon application. Also, if I ever decide to study law, would it affect my bar exam?

    I would say it would have an impact.

    Is there usually a rough percentage of what they will accept?

    Depends. But if you have nothing, they might accept something low (ie. below 50%) however you will be hassled and hounded for a long time before they even get to that point.

    As others have said, it is in your best interest to pay it off, try to get it rolled into one big lump sum and negotiate how much you will pay off and over what time frame. I have known people who have taken the bankruptcy route and I have to say, the people at the most venerable end of society (ie. high school education, no job or trade skills, no rich family, mental health issues) really struggle to recover from that route and forge ahead for a better life. The ones that do better out of it are self-employed or highly skilled, but even they are seriously inconvenienced by it.

    Finally, if you applied and were accepted for any credit cards while you were being seen for mental health issues or going through financial hardship, you might have a claim that the bank shouldn't have given you a credit card. I knew someone that was going through financial hardship 10 years ago and they racked up a 10k CC debt they couldn't repay, then just after the royal commission ended up getting it wiped during negotiation (they are so lucky the stars aligned for that to happen!)

  •  

    Try your best to get into an agreement. It'll save you a lot of hassle in the future by the sounds of it.

  •  

    Did you negotiate the debt agreement yourself?

    If so, see a financial councilor.

  • +3 votes

    Hi mate

    There's free advice out there

    Start off by speaking to the hardship department of each of your bank's

    Every bank has one. Tell them you're full situation. There's a lot that they can do. Source: used to work there.

    So be open. Show that youre willing to make something of it.

    Don't rule out bankruptcy/ part IX Debt agreement. Might be a chance to hit the refresh option.

    Be realistic about your study goals and ambitions. E.g. if you've never been good at science and don't have amazing marks or at least amazing capacity to study, probably not a great idea forecast that you'll become a doctor any time soon. Similar with law. It's a high paying profession because it's challenging to get into.

    Good on you for accepting where you're at. Seems like you have your head screwed on the right way and you're willing to be honest with yourself.

    Best of luck

  •  

    Also, if I ever decide to study law, would it affect my bar exam?

    If you intend on being admitted a solicitor or a barrister, then yes it is something that you would need to disclose to the relevant body, and yes, it may be an issue.

    •  

      It will have to be disclosed should OP apply for admission. That said, given their background circumstances, it is unlikely that being a discharged bankrupt will in itself be grounds for exclusion from the profession.

  •  

    I started a new degree

    Can you get a part time job to help pay off the loan, after entering into a payment plan with the other parties?

  •  

    Mortgage rates are at an all time low, however credit card rates are still about 15-20%, if your credit card debt is at that rate, then you will realistically never be able to pay it off.

    First thing you need to do is try to find a 0% credit card you can transfer the debt to for a reprieve of about 12-24 months.

    If you roll over the debt into a consolidated debt agreement you will no longer have an option to transfer it to a 0% credit card, it will reduce your interest repayments to approx personal loan % interest rates, maybe 8-13%. This will definitely help in the long term, but will still be very difficult to pay it off unless you really get into paying down the debt as soon as you can.

    If you think it will take longer to pay that debt down unassisted than it will take to become bankrupt and clear the debt over time, then you should probably declare bankruptcy. Make sure you understand what it means to be bankrupt, before taking this route.

    This is not financial advice, talk to a financial counseling service asap.

  • +2 votes

    In the long run, 50k is not much. Many a peasant, gambler, success story, and even just normal people have lost decades of effort to the cartels that come to collect, and often in a few short bursts of excitement.

    No doubt right now, it seems terrible. In the mid to long term, getting a good job and working hard will allow you to be free of it faster than you think. Maybe you can reach an arrangement with your credit providers and pay a little less than you might otherwise end up having to. Others have provided links that may help you with settling things the best way.

    Definitely most important to get some professional help to address this before they ratchet the interest and non-payment penalties. Once this is done, you'll be able to think more clearly.

    After that, find the elephant in your room! "I know this is entirely my fault and I’m trying my best to start life over again but I don’t know what’s the best solution"

    At some point, you need to see the elephant, and come to terms with it. Or you could easily do the same thing again differently. What are the reasons (root causes) you got into this debt? How will you prevent it occurring again? If you ignore that, you will make similar mistakes again.

    Best to be sure you are never driven the same way in future. For most of us, it is just our thinking. Understand first that you are not meant to have much, and others, especially commercial interests, will do their best to take it when you have it. Even if you are born to all kinds of riches, many lose it. If you want to improve your situation, stop wanting things, and instead need what is important, (health, love, time, etc.) and make yourself the best candidate for what you and those around you actually need. Many people are not the best candidates most of the time, but survive and thrive anyhow. You can do it, once you stop the thinking that drove you to your current place.

    Re Uni, beware. To some, it can be an easy faith. It can seem a panacea, but it too can be costly in terms of time and money, and success may be ellusive. Reading will always remain the best form of learning. Most people can't read anymore. Others actually learn to do it at Uni. Others don't, and of these, many fail. It is a skill replaced long ago by curricula and exams, tv, then devices, and now memes and social media modifying people's attention spans. Reading helps you gain wisdom, offers resources, happiness, and much more. Is what you most need to learn actually taught at Uni? I am not saying uni is the wrong thing- it just may not be the place to start until some other stuff is dealt with.

    Good luck, it's up to us how we deal with all the pressures in life, we are seldom well equipped to do it, but most can find the ways and means when we must. You can too.

  • +3 votes

    Sorry you’re struggling. Try this group, it’s a free services staffed by ex bankers, who aim to help those in severe hardship avoid bankruptcy www.wayforward,org.au They have all the right contacts within the banks and seem to genuinely want to help. They also won’t try to see you anything. Source: Work at one of the companies they’ve contacted to seek help for a client.