If you are trapped by bad debt then you most probably know about part IX agreement or part 9 agreements. Taking part IX agreement is usually seen as an alternative to declaring bankruptcy. The agreement is usually presented as a debt consolidation service that offers an easy and satisfying payment plan to creditors. So what exactly is part IX debt agreement, what does it entail and will part IX debt agreement affect your ability to get a car loan? In this article, we are going to answer these questions to help you make an informed decision.
WHAT IS PART IX AGREEMENT?
Part IX agreement a type of an agreement that is alternative to full bankruptcy and it is usually formed between you and your creditor if you are not able to pay off your debt on time. In this agreement, you will commit the amount of money that you will be able to pay either on weekly, monthly or quarterly basis to pay the debt that you owe the creditor. During this period, all interests and fee will be frozen to allow you to pay back the principle debt. You will have to submit a proposal to the creditor that provides details on how you are planning to pay the outstanding debts. If the creditor accepts your dept agreement proposal and you enter to an agreement, the proposal will be filed on your report for the next five years and it will actually be seen as an act of bankruptcy. However, you will be required to pay certain amount fee to the debt agreement administrator in order to have an agreement. The proposal will become a formal agreement once the creditor agree either by vote in a meeting or in writing to accept all terms that you have put across in the debt agreement proposal.
HOW WILL PART IX DEBT AGREEMENT AFFECT YOUR ABILITY TO GET A CAR LOAN?
Nothing will stop you from applying for a car loan if you are in part IX debt agreement with your creditor. However, it may not have the success that you hoped for. The main reason why people enter into part IX debt agreement is because they want to look for a simple way of pay off their debts. Therefore, not so may lenders will allow you to get deeper into the process. Part IX debt agreement will negatively impact on your credit history the same way a bankruptcy can. The record of your debt agreement will show up for the next five years including the record of all your defaulted debts. This will make it very difficult for lenders to allow you to get a car loan that you really wanted.
In some instance the creditor may deny giving you a car loan if you are in part IX debt agreement. If the lender evaluates your current financial status and notices that you will struggle to pay the loan, he may deny you the loan because the risk is too high. Most lenders tend to avoid financing loans that are termed as high risk. This is because chances of not being able to pay the loan are high. In some cases, you may not be allowed to take any loan including a car loan when you are in part IX debt agreement. This means that you cannot apply for a car loan.
When you enter into a part IX debt agreement with your lender, you your credit rating and score will automatically be affected. You will have a poor credit score and rating meaning that you will have hard time trying to convince lenders why they should give you an additional loan while you are struggling to pay others. The lender will only give you a car loan if you prove to them that you have good banking conduct for a minimum period of six months. You must also have a stable income. In addition to that, the lender will scrutinize your banking statements, your pay slips and tax return, proof of income as well as credit card statements. If the lender is convinced that you will be able to pay off the car loan as well as the as honor the part IX debt agreement you signed, he may decide to give you the car loan. However, the loan will attract high interest rate because the loan will be termed as high risk.