The American Heritage® Dictionary of the English Language defines debt as ‘an obligation or liability to pay or render something to someone else’ while West’s Encyclopaedia of American Law defines the term thus ‘a fixed and certain obligation to pay money or some other valuable thing or things, either in the present or in the future. In a still more general sense, that which is due from one person to another, whether money, goods, or services. Also, sometimes an aggregate of separate debts or the total sum of the existing claims against a person or company.’ Thus we see that whatever the source used, a debt is actually a liability. If you have any unpaid money for any goods or rendered services, you are in debt. Remember, even the unpaid amount on your credit card is a debt. Debts are of two types –

• Unsecured debts – These are the debts in which no specific assets have been shown as collaterals. Credit card debts, bank overdraft and outstanding rent etc. come under the purview of this term

• Secured debts – Obviously, the debts in which collateral are involved are called secured debts. Examples of this type of debts are car loans, home loans and the like.

If you are steeped in so much debt that it has become impossible for you to pay up your creditors, you have the option of filing for bankruptcy. You can either file for bankruptcy yourself or be forced into doing so by your creditors. Remember that filing for bankruptcy does not absolve you of all your debts. The court will appoint a trustee who will determine how best to recoup the amount owed. This is done based on your earning capacity and other parameters. Although bankruptcy looks like an attractive option in case of debts, it actually entails a lot of legalities and thus should only be used as a last resort in extreme cases.

If you are looking for a way out of the debt trap you have fallen into, just visit www.debtescape.com.au. The site is managed by Credit Counsellors Australia, a subsidiary of SRMC Limited and also one of the most reputed companies providing insolvency service for individuals in Australia.

Their team of insolvency counsellors, who are all tertiary qualified in accounting, can provide you the best advice on how to consolidate your debt and get a debt agreement. These professionals specialise in bankruptcy debts and bankruptcy credit counselling and will be able to take care of all your debt consolidation needs. The site www.debtescape.com.au also has tips and advice on debt consolidation care, bankruptcy, debt agreement and consolidation personal loans.

Paul Liddy worked as a banker for 12 years before retiring to take up writing full time . This experience provide him with an insight into all matters financial, helping him to write such article.

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