Individuals or companies tend to gamble in the hopes that they will receive profits that they would never gain if they would not take risks. It is true that taking risks could bring success, but it is also true that taking huge risks could put the individuals or the companies in huge trouble. 

This trouble could be the brink of bankruptcy. What could save the individual or the company from bankruptcy is something called a debt agreement.  Such an agreement could be the salvation of debtors who have a hard time paying off their debts, but along with it come some consequences that the debtors have to face.

What are the consequences of Proposing a Debt Agreement?

Proposing a debt agreement will have many consequences. To start the list, a debtor who proposes a debt agreement is also realized to be someone who commits an act of bankruptcy. Thus, if the proposal will be rejected by the creditors upon assessment, the creditor could appeal to court to make the debtor bankrupt. Aside from this, the name and other information about the debtor will be temporarily recorded on the National Personal Insolvency Index (NPII). 

The duration of this record will depend on the decision of the creditors on whether the debt agreement will be accepted. Also, the debtor’s access to other forms of financial assistance would be affected. All of these effects will be experienced by the debtor depending on the decisions of the creditors on whether or not the debt agreement proposal will be accepted. If the proposal will be rejected, all of these consequences will not be experienced, but the debtors will then declare bankruptcy ( click here for bankruptcy information ).

What are the consequences of Entering a Debt Agreement?

 One consequence is that a debt agreement will be documented in the financial records of the debtor and it will stay in those records for a couple of years even after payment of the debt itself. This will make it hard or even impossible for the debtor to acquire loans or other forms of financial support from other creditors, especially on the agreed time of payment stated in the debt agreement. A debt agreement is noted on the debtor’s profile for a couple of years, and this will always be checked by creditors every time the debtor wishes to borrow money from other creditors. 

Thus, having a debt agreement in the debtor’s profile makes it hard for them to avail of small loans, mortgages, and credit cards. In consideration of these things, proposing and being part of a debt agreement should be avoided even if there’s a huge need for it. However, if it is inevitable, choosing the right administrator will greatly help an individual or a company recover from the current state they are facing.