How do I know if Bankruptcy is right for me?

Bankruptcy is a legal procedure that can be filed when a person cannot pay their debts. The Bankruptcy Act of 1966 and the Australian Financial Security Authority manage bankruptcy in Australia. In exchange for protection against a creditor suing you, a person or company that you owe money to once you have been declared bankrupt, you relinquish management of your finances and assets to a trustee. Depending on your financial condition, you may be able to avoid filing for bankruptcy through informal agreements, debt consolidation, refinancing your mortgage, debt consolidation, refinancing your debt consolidation, or personal insolvency agreements.

Is Bankruptcy an option for me?

 If you fulfil these two criteria, you may file for bankruptcy:

• You are unable to make your required debt payments on time (insolvent)
• You reside or conduct business in Australia, or you are physically present in Australia.

 

You are not required to have a certain minimum or maximum debt or income to qualify. Applying for bankruptcy is entirely free. Consult your administrator if you are already in a debt agreement and wish to declare bankruptcy. Before applying, you must end your debt agreement.

What happens if I declare bankruptcy?

When you declare bankruptcy, your unsecured creditors will stop contacting you. If you want this to happen, you must provide a list of all your unsecured creditors within your Statement of Affairs. This list includes any joint debts you have, which you may have incurred with another person, and any money you may owe to relatives and friends. Once you declare bankruptcy, most legal actions that an unsecured creditor had launched against you must cease. This rule also holds true for any recovery actions a sheriff or bailiff takes, such as a garnishee on your salary or bank account. You should let the trustee know if any unsecured creditors get in touch with you again. They’ll get in touch with the creditor. Some debts, such as the following, must be paid even after filing for bankruptcy:

• Court-ordered fines and penalties
• Unliquidated damage due to mishaps, such as car accidents, may be exempt.
• Loans for additional education and HELP obligations

 

You must continue to pay certain payments, such as your utilities and any new debts you incur after the beginning of your bankruptcy.

Here are the pros and cons of filing bankruptcy so that you can decide if its a viable option for you

The following are some of the advantages of declaring bankruptcy:

• Most of your debts will be dismissed once you have been discharged from bankruptcy.
• You can file for bankruptcy regardless of how little you owe.
• Your trustee will be in charge of handling the majority of your discussions with your creditors.
• Your payments will be made to your trustee, who will handle the rest.
• Bankruptcy typically lasts three years and one day.
• The majority of the time, your superannuation is safe.

 

The following are drawbacks of declaring bankruptcy:

• Secured creditors may approach you to explore the possibility of possessing property like your home or automobile.
• After declaring bankruptcy, you will encounter difficulties getting credit for a while.
• The National Personal Insolvency Index (NPII) keeps a permanent record of your bankruptcy, which anybody can access for a fee.
• You might have to turn in your passport and ask your trustee for permission to leave Australia.
• If you do not cooperate with the trustee and fulfil specific tasks, legal action could be taken against you.
• The majority of your valued possessions are lost.

 

If you are having trouble paying off your debts and are thinking about declaring bankruptcy, please talk to one of our experienced and friendly advisers at ABS to find out how we can help you right away. Call 1800 462 767, our toll-free number, today.