If you are facing bankruptcy and you own a home you need to read this article very carefully to see how it will affect you and your spouse (if you own it jointly with your spouse).

How will your mortgage be affected in bankruptcy?

The first thing you need to know is if you declare bankruptcy it may not immediately impact your mortgage however if you fail the keep the mortgage repayments up to date the mortgagee will in most cases take steps to repossess the property. If your mortgage repayments are up to date, there is no reason why your bank or financial institution would take active steps to repossess your home. However you need to consider what action your Trustee in Bankruptcy will take if you have equity in the property.

How is the equity in your home calculated?

If you have equity in the property, then your Trustee in Bankruptcy will most likely take steps to realise that equity. Under Australian bankruptcy laws the equity in the property vests with the Trustee. The equity is calculated as the value of the property less the amount owed to the mortgagee on the property.

What happens if you own the property jointly with your spouse?

If you own the property jointly with your spouse then typically the equity will be split 50/50 with the other joint owner. In this situation the Trustee in Bankruptcy can only seek to realize the equity which belongs to the bankrupt person. Let’s look at an example to illustrate. Let’s assume the property is worth $250,000 and the mortgage registered against the property is $200,000. The total equity in the property would be $50,000. Let’s further assume that the property is owned by a husband & wife as joint tenants (ie on a 50/50 ratio basis) and the husband files for bankruptcy with credit card debts of $75,000. In this example the Trustee in Bankruptcy for the husband will seek to realize the husband’s equity in the property being $25,000 (50% of the $50,000 equity). This is the maximum amount that the Trustee in Bankruptcy can seek to recover to satisfy the husband’s credit card debts of $75,000.

Can the non-bankrupt spouse save the home?

Using the above example the non-bankrupt spouse could offer to purchase the equity from the Trustee in Bankruptcy for $25,000. If this offer was accepted the non-bankrupt spouse (ie the wife) would need to raise funds of $25,000 to pay the husband’s Trustee in Bankruptcy. This could be achieved by approaching the current mortgagee and borrowing an additional $25,000 to purchase the husband’s equity in the property. Please note that the mortgagee’s consent would be required to register the transfer on title and this may be problematic unless the non-bankrupt spouse can prove that they can afford the repayments themselves (given the bankruptcy of the other spouse).

It is important to note that any sale will need to be negotiated using market values. Market values are determined by obtaining a valuation from a registered property valuer.

What happens if there is no equity?

If there is no equity in the property (ie the mortgage is more than the value of the property) and the bankrupt wishes to keep the property then the Trustee in Bankruptcy may not take immediate steps to sell the property. If the bankrupt elects to keep the house and continues to pay the mortgage payments and the value of the house later increases, the Trustee in Bankruptcy has up to 6 years after the bankrupt is discharged from bankruptcy to sell the house and realize the equity (Sec 129AA(3) of the Bankruptcy Act). So if someone goes bankrupt today and there is no equity in the property and the bankrupt elects to continue to pay the mortgage and the property later increases in value, then the Trustee in Bankruptcy has up to 6 years from the time that the bankrupt is discharged from bankruptcy to sell the house and realize the equity. Furthermore the Trustee in Bankruptcy has the option to extend out this period to a future date by issuing a notice to the bankrupt under Sec 129AA(5) of the Bankruptcy Act. The Bankruptcy Act does not appear to place a restriction on Trustee with nominating a future date, so in theory it could be an indefinite time period.

Bankruptcy is complicated and for that reason you should only seek advice from a Registered Trustee in bankruptcyor a suitable qualified and experienced solicitor who practices in the area of bankruptcy. The Australian Bankruptcy Service has a registered Trustee on site and can assist today.

If you or your spouse are contemplating bankruptcy and you want to understand how bankruptcy is likely to affect your family home, then call us today on 1800 462 767 to discuss your options. Our toll free telephone line is open 24 hours everyday / 7 days a week.

All calls are free, entirely confidential and if required, anonymous.

Voluntary bankruptcy should not be a rushed decision. Most people can see it coming for months or even years, and some will try and take precautionary measures to protect themselves as much as possible. For the common person his only makes sense, however, we need to be aware of some very strict bankruptcy rules.

This post tries to explain some of the rules, in particular rules about superannuation contributions or property “gifted” to family or friends prior to bankruptcy.

Unfortunately, some people try to get clever and hide or transfer assets to family or friends prior to filing for bankruptcy. In a series of recent high profile bankruptcies we have seen that the debtors have tried to put assets out of the reach of their creditors.

The Australian bankruptcy laws anticipate this type of behaviour and in certain circumstances these transactions can be reversed for the benefit of creditors.

For example, if you have made large and unusual contributions into your superannuation fund (whilst you were insolvent) and shortly before you became bankrupt then your Trustee in Bankruptcy will carefully review these contributions. If the Trustee in Bankruptcy is of the view that the contributions were made to defeat creditors then the Trustee is able to make an application to court and have the contributions paid into the bankrupt estate.

In a recent case we observed that the debtor (the person who later became bankrupt) transferred a property worth $6.4million for mere $1 to his wife shortly before bankruptcy. In this case the Trustee in Bankruptcy has publically reported that he will commence proceedings to reverse the transaction as it was a transaction to defeat creditors.

If the Trustee in Bankruptcy is successful in reversing this transaction, the trustee can then object to the bankrupt’s usual discharge from bankruptcy and apply for the bankruptcy term to be extended up to 8 years. This means that the debtor will be bankrupt for 8 years instead of the usual 3 years.

If you are considering bankruptcy and have assets you need to be aware that you cannot imply “gift away” these assets to family or friends.

If you or your spouse are contemplating bankruptcy and you want to understand how bankruptcy is likely to affect your superannuation, then call us today on 1800 462 767 to discuss your options. Our toll free telephone line is open 24 hours everyday / 7 days a week.

All calls are free, entirely confidential and if required, anonymous.

In Bankruptcy, provable debts are debts which can be claimed against you through the bankruptcy process. All creditors that are owed provable debts must submit and prove their claims to the trustee in bankruptcy. Creditors who prove their debts are also able to vote at meetings of creditors. A creditor who has a provable debt cannot continue recovery or legal action after you have become bankrupt. If the provable debt is not repaid through the bankruptcy process (by way of a dividend) the debt must be legally written off and cannot be pursued after you have been discharged from bankruptcy.

So the question must be asked – what is a provable debt in bankruptcy?

Section 82 of the Bankruptcy Act set outs what debts are provable in bankruptcy.

The most common examples of provable debts are:-

• Personal credit card debts as long as they were incurred before bankruptcy;
• Personal loans as long as they were incurred before bankruptcy;
• Trade creditors (ie if you traded a business as a sole trader these debt can be included as long as they were incurred before bankruptcy);
• Services provided before bankruptcy (like electricity, gas or telephone charges)
• Debts guaranteed (ie you may have provided a personal guarantee prior to your bankruptcy)

Non- Provable debts in bankruptcy

Some debts in bankruptcy are not provable, which means they cannot be claimed in a bankruptcy or in other words they will not be cleared by bankruptcy. This means that if you declare bankruptcy you will not be released from non provable debts and you will continue to be liable to pay for them even after your discharge. Many people who are struggling with their debts think that bankruptcy releases them from all debts. Unfortunately that is not always the case, so if you are considering bankruptcy it is important to understand which debts you will not be released from.

The most common examples of non-provable debts are:-

• Council & water rates
• Penalties and fines imposed by a Court
• HECS debts
• Unliquidated damages
• debts incurred by fraud
• Any amount payable under the proceeds of crime laws
• Student Loans
• Abortive writs, collection agents expenses
• Unenforceable laws

Council and Water Rates

Council rates & water rates are not provable in bankruptcy as they attach to the property for which the rates relate to. In other words they are secured against the property.

Penalties or fines imposed by a court

Fines or penalties imposed by a court are not provable in bankruptcy, which means you will continue to be liable to pay any fine or penalty imposed by a court.

HECS debts

Any debts generated under the Higher Education Support Act 2003 are not provable in bankruptcy, which means you will continue to be liable to pay any HECS debt.

Unliquidated damages

If you have pending court action against you, declaring bankruptcy prior to any court assessment of those damages are not provable in bankruptcy, which means you will continue to be liable to pay any claim for damages. If you have a claim for damages against you it is best to wait until that claim has been assessed by the court before filing for bankruptcy. The most common claim for unliquidated damages is where somebody has been involved in a car accident. If this has happened to you, it is best to wait until the damages have been assessed by the court and a judgement has been awarded.

Any amount payable under the proceeds of crime laws

Debts incurred under both state and Commonwealth laws, such as pecuniary penalty orders, are not provable in bankruptcy.

Student Loans

Student loans from youth allowance and Austudy are not provable in bankruptcy, which means you will continue to be liable to pay any student loan.

Abortive writs, collection agents expenses

Costs of abortive writs are not provable nor are collection agents’ expenses unless the debtor is liable under the terms of the contract.

Unenforceable laws

If a debt is not enforceable at law (ie it is an illegal activity) then the debt is not provable in bankruptcy, eg a debt due to a minor, an unlicensed bookmaker or a debt related to illegal purchases.

Due to the complex nature of bankruptcy laws and regulations you should only deal with a Registered Trustee in Bankruptcy who has the adequate qualifications, training and experience. Dealing with anyone else who doesn’t have the necessary qualifications, training and experience could be dangerous.

Here at the Australian Bankruptcy Service we have a Trustee in Bankruptcy on site who can assist.Call today to get free, professional advice on1800 462 767. Our toll free telephone line is open 24 hours everyday / 7 days a week.

All calls are free, entirely confidential and if required, anonymous.

A Registered Bankruptcy Trustee also administers bankrupt estates under the Bankruptcy Act. A Registered Trustee is licensed and supervised by the Inspector General in Bankruptcy of AFSA. A Registered Trustee is usually a fully qualified accountant with the minimum education and experience as set out in the Bankruptcy Act and usually works in a private accountancy firm. A Registered Trustee will undergo an annual inspection program carried out by the Bankruptcy Regulation unit of AFSA. The purpose of the annual inspection program is to ensure that the Registered Trustee is discharging their duties in accordance with the Bankruptcy Act. If serious malpractice is detected by the Bankruptcy Regulation unit the matter can be referred to the Inspector General in Bankruptcy and the Registered Trustee could face disciplinary action or their registration could be cancelled.

If you wish your estate to be administered by a Registered Trustee please enquire today as we have a Registered Trustee on site who can administer your case.

Call the Australian Bankruptcy Service today on 1800 462 767 if you wish to engage the services of a Registered Trustee in Bankruptcy.

A Trustee in Bankruptcy must be free from any conflict of interest and must at all times act in an impartial manner. Any prior dealings with the debtor (the person to be made bankrupt) must first be disclosed to creditors. Depending on the type of any prior dealings or relationship with the debtor, the Trustee in Bankruptcy may not be eligible to be appointed as the Trustee. If the issue of any conflict of interest or perceived conflict of interest arises during the course of the bankruptcy administration then Trustee may need to resign from office. A Trustee in Bankruptcy must declare that they have not had any previous dealings or relationships with the debtor (person to be made bankrupt) and the debtor is not a related party. In practice this declaration is in the form of a Declaration of Independence, Relevant Relations and Indemnities (DIRRI). The Australian Restructuring Insolvency & Turnaround Association has set out the requirements of a DIRRI and has stipulated that it must comprise three components:

A. Declaration of Independence;
B. Declaration of Relationships, which includes:

i. the circumstances of the appointment;

ii. any relationships with the Insolvent and others within the previous 24 months;

iii. any prior professional services for the Insolvent within the previous 24 months;

iv. that there are no other relationships to declare.
C. Declaration of Indemnities and upfront payments.

Call the Australian Bankruptcy Service today on 1800 462 767 if you would like to learn more about the need for Trustee to be independent and impartial.

AFSA (The Australian Financial Security Authority) is the Federal Government agency which is responsible for maintaining a bankruptcy registry and information service. The AFSA Bankruptcy Registry has many functions such as:

• Bankruptcy applications
• Bankruptcy list
• Phone support for debtors

Bankruptcy applications

AFSA processes all bankruptcy applications. If you have completed a debtor’s petition, AFSA will accept the application for processing and will review your completed Statement of Affairs. If the Statement of Affairs is incomplete in any way AFSA may refuse to process it.

Once the Statement of Affairs and Debtor’s Petition has been processed by AFSA, the registry will issue your nominated Trustee with a certificate of appointment. The certificate of appointment will include the date of your bankruptcy and your bankruptcy administration number.

Bankruptcy list

The AFSA information and registry maintains and updates a bankruptcy register or list. This bankruptcy register or bankruptcy list is formally known as the National Personal Insolvency Index (NPII). The NPII is updated every-time a person enters into the formal insolvency regime, including the following appointments:

• Bankruptcy – debtor’s petition
• Bankruptcy – creditor’s petition
• Debt Agreement
• Personal Insolvency Agreement

The NPII listing includes your name, date of appointment and the type of administration. The NPII listing is maintained forever and your details will not be removed unless if the administration is successfully completed.

Phone support for debtors

AFSA provides an information registry to the public. AFSA provides a free telephone service on 1300 364 785. AFSA also has an extensive web site www.itsa.gov.au which provides a wealth of information on the personal insolvency regime. You can also contact AFSA by email at info@afsa.gov.au

Call the Australian Bankruptcy Service today on 1800 462 767 if you would like to learn more about AFSA’s role in the Australian Bankruptcy Regime.

Australian Financial Security Authority (AFSA) is the regulator for the personal insolvency regime in Australia. AFSA is a Commonwealth Government agency and has offices in every capital city of Australia.The Inspector General in Bankruptcy (the chief public officer of AFSA) is responsible for overseeing the operations and functions of AFSA, which includes:

• Information registry;
• Official Trustee functions;
• Licences Registered Trustees and Debt Agreement Administrators; and
• Bankruptcy Regulation.

Information Registry

AFSA provides an information registry to the public. AFSA will provides a free telephone service on 1300 364 785. AFSA also has an extensive web site www.afsa.gov.au which provides a great wealth of information on the personal insolvency regime.

The AFSA information registry also issues bankruptcy notices for creditors wishing to apply to court for a sequestration order against a debtor.

Official Trustee

The Official Trustee administers bankrupt estates where a Registered Trustee (a Private Bankruptcy Trustee) has not consented to act. The Official Trustee is also a public officer under the employ of the Inspector General in Bankruptcy of AFSA.

The Official Trustee can appoint (i.e. out source) a bankrupt estate to a Registered Trustee. The Official Trustee will typically administer bankrupt estates which have no funds (ie no assets to realise or statutory income contributions to collect). The Official Trustee won’t charge a fee to administer the estate unless assets are to be realised or statutory income contributions are to be collected. The Official Trustee may charge a flat fee of $4,000 + 20% of realisations.

Licences Registered Trustees and Debt Agreement Administrators

The Inspector General in Bankruptcy licences and monitors Registered Trustees and Debt Agreement Administrators. To be become registered as a Registered Trustee or a Debt Agreement Administrator you need to have the minimum level of education and experience as determined by the Inspector General in Bankruptcy from time to time.

Bankruptcy Regulation

The primary function of the AFSA Bankruptcy Regulation is to monitor the activities of Registered Trustees, Debt Agreement Administrators and the Official Trustee. The Bankruptcy Regulation Unit will also attend to complaints made by creditors or debtors regarding the activities of Registered Trustees, Debt Agreement Administrators or the Official Trustee. If you wish to make a complaint about a Registered Trustee or a Debt Agreement Administrator you should write to the AFSA Bankruptcy Regulation Unit in the closest capital city in which the Registered Trustee or Debt Agreement Administrator operates.

Bankruptcy Regulation also inspects the files of Bankruptcy Trustees and Debt Agreement Administrators on an annual basis. The purpose of the inspection is to ensure compliance with the Bankruptcy Act. If non-compliance is found the Bankruptcy Regulation may refer the matter to the Inspector General in Bankruptcy or to the Courts if a serious matter is identified.

The Official Receiver’s role

The Official Receiver has a supervisory role under the Bankruptcy Act and is a public officer under the employ of the Inspector General in Bankruptcy of Australian Financial Security Authority. The Official Receiver must also maintain the National Personal Insolvency Index (NPII).

The Official Receiver is also empowered to accept or reject a debtors’ petition for bankruptcy.
Furthermore, the Official Receiver is empowered to issue notices under the Bankruptcy Act on behalf of Registered Trustees. Such notices include:

• 77AA access to premises
• 77C notice that require the production of records
• 139ZQ notice to recover property

Official Receiver’s notice 77AA – Access by the Official Receiver

The Official Receiver has the power to access premises to obtain books and records and can makes copies, take extracts or remove books and records that the Official Receiver considers relevant to the examinable affairs of the bankrupt.

If a Registered Trustee wishes to invoke this power the Registered Trustee must be accompanied by the Official Receiver.

Official Receiver’s notice 77C – Notice that require production of records

The Official Receiver has the power to issue a notice to any person relevant to the investigation of a bankrupt estate to:

• Deliver up information (books and records) relevant to the investigation of the bankrupt estate
• Attend the offices of the Official Receiver to give evidence under oath (either orally or in writing) regarding the investigation of the bankrupt estate

The evidence obtained by the Official Receiver on oath can be used in proceedings under the Bankruptcy Act.

Official Receiver’s notice 139ZQ – Notice to recover property

If a person has received money from a bankrupt that is considered to be recoverable under the Bankruptcy Act then the Official Receiver may issue a notice demanding that the money be repaid or for the property to be transferred to the Registered Trustee within a specified period of time.

Call the Australian Bankruptcy Service today on 1800 462 767 if you would like to learn more about AFSA’s role in the Australian Bankruptcy Regime.

Susan and Ryan called Bankruptcy Australia for advice on filing for bankruptcy. Susan and Ryan have several credit cards and one personal loan and used the credit card to shop on-line.

Susan loved shopping on-line so much that she wanted to know if she could keep her credit card if she filed for bankruptcy. In other words she wanted to exclude one credit card from her bankruptcy application even though she had an amount outstanding on it.

We explained to Susan that when you file for bankruptcy in Australia you must disclose all debts outstanding in your bankruptcy application (the formal process is to complete a Statement of Affairs).

Bankruptcy can affect anyone. Here at the Australian Bankruptcy Service we see and hear every day how quickly someone’s personal finances can spiral out of control when faced with a sudden financial shock. Our staff have carefully prepared the following list to warn people of the risk factors often involved in pushing someone towards bankruptcy. If any of the below apply to you we offer confidential free advice 24 hrs / 7 days a week.

Credit Card Debts

It seems to be the case that more and more people are happy to spend money that they do not have. Credit cards, with their high interest rates, often have the effect of sending people into a debt spiral which is difficult to get out of. The problem continually compounds itself, so that eventually a person may find themselves in a situation where they cannot even afford the minimum repayment, particularly if you have multiple credit cards. If the person cannot secure help from friends or family bankruptcy can eventually become inevitable. We are experts in helping people manage exactly this kind if crisis, so if you are experiencing significant problems related to credit card or personal loan debts, call our toll free advice and speak to an expert.

Job Loss

Unsurprisingly, the loss of a regular income greatly increases the chances of becoming insolvent which will eventually lead to bankruptcy. Whether this occurs as a result of voluntary resignation, or involuntary termination the speed in which loss of employment can cause damage on your finances should not be underestimated. A redundancy pay out can help in the short term (as most people get a financial payout) but if you have debt you need to spend that payout very wisely.

Divorce and Separation from a partner

When marriages or de facto relationships end, they can often put a huge financial strain on both parties. A couple with a double income is in a far more comfortable financial position than the two parties would be on their own, as many costs, including accommodation & essential services (like electricity, telephone & water costs) are shared. A divorce brings with it many extra costs, including the initial legal fees, a division of marital assets as well as child support payments. The process will in most cases put a significant strain on the household budget and can lead to reliance on credit cards to pay essential living costs. If this process isn’t controlled carefully it can lead to bankruptcy.

Unexpected Expenses

There is a whole range of unexpected occurrences that can culminate in bankruptcy.

• Natural disasters
• Property theft
• Spousal death
• Medical issues

These are just some examples of the unsavoury events that may force a person into bankruptcy. People often assume that the various insurance policies they have taken out over the years will cover them in the face of some of these events, later to find that they will not. A flood, for example, is often not covered, and leaves a person without a home or furnishings.

Ultimately, there are many things that can cause bankruptcy. However, sound financial planning and a little bit of common sense can help to make sure that this never happens. Those who do find themselves in a position where they may need to declare bankruptcy should seek the advice of a financial planner before taking this option.

If you are thinking about bankruptcy but not sure if it is the right option for you call our friendly and professional staff at the Australian Bankruptcy Service toll free on 1800 462 767. Our toll free telephone line is open 24 hours everyday / 7 days a week.

All calls are free, entirely confidential and if required, anonymous.

Bankruptcy forms are available on the AFSA website and you are able to file for bankruptcy yourself, however many people are scared or unsure of the process and want help. Here at the Australian Bankruptcy Service we offer a friendly and professional bankruptcy form service. We will guide you through the process of completing the forms and applying for bankruptcy.

We have designed the process so it is quick, easy and best of all we have staffed the help desk with friendly and professional people.

If you would like to take advantage of the service call us now – the initial call is free and we also offer a toll free advice line on 1800 462 767.

As part of the service we will be able to explain the consequences of bankruptcy. It is important that you fully understand the consequences of bankruptcy before you decide to go down that path.

Another benefit of getting a professional to help you fill out the bankruptcy forms is that you can be confident the forms will be filled in correctly. This will mean no delays caused by rejections from AFSA.

Filling out the forms correctly is also important so your bankruptcy period isn’t extended. If there are errors or omissions on your forms, even if not deliberate, it can cause your bankruptcy to be extended from the usual 3 years to 5 or 8 years depending on what has happened. Click here to learn more about how your bankruptcy term can be extended.

The good news is that taking advantage of all these benefits is easy, we offer a simple, flat-fee form filling service that has been utilised by hundreds of Australians who needed help with their bankruptcy application. To use this service, get in touch with us by submitting a confidential enquiry or call us. Our toll free telephone line is open 24 hours everyday / 7 days a week. Our call now on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

Bankruptcy?

If you have more debt than you can afford to repay you might need to consider personal bankruptcy, but that will depend largely on what types of debt you have. Declaring bankruptcy does not release you from being liable to repay non-provable debts or secured debts.

Secured debt

If you decide to keep the asset subject to security you will be obliged to continue to pay for it even if you declare yourself bankrupt. The risk you need to carefully consider is if you cannot afford to pay for the secured asset (ie a car lease) and you wish to surrender the asset at some later time (ie sometime after you declare bankruptcy) and the secured creditor suffers a loss on the sale of the asset then the secured creditor may claim that you are still liable to pay any shortfall (despite your bankruptcy). To avoid this risk we always advise our clients that if you have a asset subject to security (ie a car) and the amount outstanding exceeds the value of the asset then it is best to surrender the asset prior to bankruptcy and allow the secured creditor to sell the asset and claim in the bankruptcy for the shortfall. This way it avoids any risk that you may continue to be liable to pay any shortfall after you declare bankruptcy.

Credit cards

The most common type of debt in bankruptcy is credit card debt. There are no limits on how many credit card debts you can include your bankruptcy.

Store cards

Store card debts are becoming more popular. Some stores like (Myer, David Jones and Harvey Norman) offer store cards to eligible applicants. These store cards allow you to purchase goods from the retailer. The store card is often provided by a finance company (like GE money). If you go bankrupt any unpaid balance on the store card can be included in your bankruptcy.

Personal loans

Many banks and finance institutions offer personal loans to eligible applicants for many different purposes (like holidays, to buy cars etc). If you have a personal loan the unpaid balance on it can be included in your bankruptcy.

Guarantee debts

If you have guaranteed a debt for another person (ie a spouse or a family member) or you have personally guaranteed a business debt and the debt has not been paid and you wish to declare yourself bankrupt, then you should list in your bankruptcy application all parties you have provided a personal guarantee. Your bankruptcy trustee will then write to all parties you have provided a personally guarantee to and provide them with the opportunity to claim in your bankruptcy.

Non- provable debts

You need to be aware that some debts cannot be included in your bankruptcy. These are known as non-provable debts and are best explained in our post talking about non-provable debts.

Before you file for bankruptcy it is best that you consult with a bankruptcy expert to establish what debts can be included in your bankruptcy.

Here at the Australian Bankruptcy Service we have a Registered Trustee in Bankruptcy on site who can assist.

If you or your spouse are contemplating bankruptcy and I want to understand what types of debts are cleared by bankruptcy, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.

If you have serious debt problems and are unable to repay your debts, you may wish to consider declaring bankruptcy on a voluntary basis.

With a voluntary bankruptcy the application it is submitted by you and does not require consultation or approval from your creditors or the Court. This process is known as a debtor’s petition. Once submitted and accepted by AFSA, a trustee in bankruptcy will be appointed. The role of a trustee in bankruptcy is to take control of your financial affairs. So this means that if you submit a voluntary bankruptcy application your creditors will not be able to apply to a court to make you bankrupt with a creditor’s petition.

Bankruptcy can have serious financial implications so before you decide to submit a voluntary bankruptcy application we recommend that you speak to a bankruptcy expert to fully understand the responsibilities and obligations of bankruptcy. A Bankruptcy expert will undertake a thorough and professional assessment of your personal finances. In many cases there are alternatives tobankruptcy that can eliminate or reduce the stress of debt whilst avoiding the harsh consequences of bankruptcy.

Please note you will not be eligible for file for voluntary bankruptcy if:

• You live overseas; or
• It is determined that you are able to pay your debts and are trying to avoid paying debts by declaring bankruptcy
• We can help prepare and fill in your bankruptcy forms, which includes conducting a thorough assessment of your personal finances. This is useful in determining if bankruptcy is the right option.
• We can also act as a registered bankruptcy trustee.

Here at the Australian Bankruptcy Service we provide professional, friendly advice to individuals who are considering to file for bankruptcy on a voluntary basis. We also offer 2 simple services for people facing this difficult financial situation.

• We can help prepare and fill in your bankruptcy forms for a once off fee starting from $800 which includes conducting a thorough assessment of your personal finances. This is useful in determining if bankruptcy is the right option.
• We can also act as a registered bankruptcy trustee starting from $80 per week (on a voluntary basis)

If you would like to discuss if a voluntary bankruptcy application is appropriate for you, then call the Australian Bankruptcy Service on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

Going bankrupt can be a difficult proposition for many Australians. Many Australians wish to avoid bankruptcy for different reasons. Some people feel ashamed or guilty that they cannot pay theirdebts. Whilst it is natural to feel this way, bankruptcy may be the only way you will be able to find the relief from debt you need.

To understand if voluntary bankruptcy is appropriate for you, consult with an expert in the field. We recommend that you only consult with people who have the appropriate experience and qualifications in bankruptcy. It is a complicated area and as such we recommend that you only consult with a Registered Trustee in Bankruptcy. At the Australian Bankruptcy Service we have a Registered Trustee on site who can help.

If you decide to file for bankruptcy on a voluntary basis, you will need to complete a bankruptcy application.The bankruptcy application will include:

• Statement of Affairs
• Debtors’ Petition

Once these forms are complete you will need to provide them to your Bankruptcy Trustee (if you wish to appoint a private trustee) or to AFSA (if you wish for the government to become your trustee).

The Australian Bankruptcy Service offers 2 simple options to help you register for bankruptcy, they are:

1. Assist you with completing the forms for a once off fee starting from $600; or
2. To be appointed as your Trustee of your estate for a fee starting from $80 per week (on a voluntary basis).

To understand our services further call our team of bankruptcy experts on 1800 462 767 and find out what is required to declare bankruptcy in Australia. Our toll free telephone line 24 hours everyday / 7 days a week on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

Attending on his or her Trustee in Bankruptcy

A bankrupt shall co-operate and attend on his or her Trustee in Bankruptcy and provide all books and records that are in the possession of the bankrupt and also if requested deliver up the bankrupt’s passport.

A bankrupt must also provide information about the bankrupt’s examinable affairs as the bankrupt requires.

Section 77 of the Bankruptcy Act also requires the bankrupt to:

• to attend a meeting creditors if requested to do so and provide any information as the meeting requires;
• to keep his or her Trustee in Bankruptcy informed of any material change;
• to execute any document as required by the operation of the Act or at the request of the Trustee in ankruptcy;
• to disclose any property which the bankrupt.

Obligation to complete a Statement of Affairs

Section 54 of the Bankruptcy Act also requires the bankrupt to file a statement of affairs within 14 days of being notified of the bankruptcy by his or her Trustee in Bankruptcy. A bankrupt must truthfully disclose all property which the bankrupt has a legal or beneficial interest in.

If a bankrupt fails to disclose all property the bankrupt will commit an offence under Section 265 of the Bankruptcy Act. A bankrupt must also disclose all liabilities in his or her Statement of Affairs.

Obligation to provide current address

Section 80 of the Bankruptcy Act provides that a bankrupt must keep his or her trustee informed of the bankrupt’s address.

Other obligations of a bankrupt

A bankrupt will commit an offence and could be imprisoned for 1 year if the bankrupt fails to do any of the following:

• to truthfully and fully disclose all property;
• to truthfully and fully disclose any transfer or disposition of property;
• to comply with a direction of your Trustee in Bankruptcy to deliver up property in the bankrupt’s possession;
• to comply with a direction of your Trustee in Bankruptcy to deliver up books and records in the bankrupt’s possession;
• to tell your Trustee in Bankruptcy as to the whereabouts of his or her books and records;
• to include all relevant material in your statement of affairs;
• to inform your Trustee in Bankruptcy if the bankrupt is aware that a creditor has filed a false proof of debt;
• to provide an explanation if requested by your Trustee in Bankruptcy of any loss or depreciation of any assets of the bankrupt within 2 years of the bankruptcy.

If you or your spouse are contemplating bankruptcy and you want to understand the responsibilities and obligations prior to filing for bankruptcy, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.

The consequences of bankruptcy in Australia can be serious. Therefore it is imperative that anyone considering bankruptcy fully understands the consequences and any alternative solutions that may be available to them. The best way to understand how the consequences of bankruptcy will impact you personally is to discuss your personal situation with an experienced bankruptcy advisor. We offer a toll free advice line that can be reached from anywhere within Australia on 1800 462 767.

In general though, the consequences of declaring bankruptcy will last for a period of at least 3 years. This period can be extended up to 5 or 8 years (depending on certain conditions being breached).

During your bankruptcy period the following conditions will be in place:

• Your assets – some assets may not be protected and will be sold by your Bankruptcy Trustee;
• Your income – you may need to pay compulsory income contributions to your Bankruptcy Trustee
• Borrowing money – you must inform any provider of credit that you are bankrupt if you apply for credit exceeding the statutory threshold. Failing to do so is an offence;
• Your employment prospects – being bankrupt can affect your ability to hold certain positions or licenses;
• Credit file – your credit file will have a mark on it for seven years;
• Contact details – you must advise your trustee in bankruptcy of any changes to your name or address;
• Travel – You must have written permission from your trustee in bankruptcy before travelling overseas, who can impose written conditions upon that travel. Failure to comply can result in an extension of your bankruptcy and may also be an offence.

Due to the nature of these conditions, and the serious nature of the decision to declare bankruptcy, we strongly advise that you only seek advice from a registered bankruptcy trustee. Make sure will only deal with a bankruptcy professional registered with AFSA.

If you would like to discuss how the consequences of bankruptcy may affect you call the Australian Bankruptcy Service on 1800 462 767.

Are you considering Bankruptcy? The first thing you should know is that your situation is not uncommon. Current statistics have the average number of Australians declaring Bankruptcy in a year at close to 20,000. The questions you are asking right now have been asked by thousands of people before you, and the reasons for it are multitude. People lose their jobs, become ill, their relationships or businesses fail. And sometimes they have simply fallen into the trap of easy credit applications and insidious interest rates, and found themselves with no other way out. Bankruptcy exists for a reason, which is to provide the most beneficial outcome possible for both creditors and debtors when people find that they cannot service their debts.

But is it right for you?

The first thing to consider is your financial situation. You should ask yourself the question: “Am I insolvent?” To be insolvent means to be unable to pay your debts as they fall due. Begin by working out a budget, preferably on a monthly basis, as that is how often most payments are due. Work out how much you have coming in, and how much you need for rent/mortgage, food, utilities, car payments and the like. Now apply what is leftover to your debts, your credit cards and/or personal loans – is there enough to cover your monthly debt repayments? Without using your credit facilities? If not, you are insolvent, and you definitely need to do something about your debt.

Now consider your asset and employment situation. Do you have a home with available equity? Or maybe a car that has been paid out in full? Is there a chance that Bankruptcy could affect your employment, either because you work for yourself as a business or company owner, or have a clause in your contract saying that you cannot go Bankrupt? If so, you may want to talk to someone about your alternatives to Bankruptcy, such as a Debt Agreement or Personal Insolvency Agreement, or maybe approach each of your creditors individually and ask if they can assist you.

But if you do not have any assets, or an employment situation that could be hindered by Bankruptcy, it may actually be the right decision for you. Declaring Bankruptcy is never a pleasant feeling, and there will be an effect on your credit rating. If you are insolvent, though, you need to take some form of action to manage your debts, for chances are it is only going to get worse.

If you would like to speak to an expert before you decide to declare yourself bankrupt, we operate a toll free advice line which is open 7 days a week. All calls are free, entirely confidential and if required, anonymous. Our toll free telephone line is open 24 hours everyday / 7 days a week. Our call now on 1800 462 767.

Bankruptcy used to be something that people were ashamed to talk about. Whilst some stigma still remains, with more than 20,000 Australians filing for bankruptcy every year the perceived negative connotations are obviously fading. In many of the cases we deal with people come to us concerned about bankruptcy but find they are actually able to avoid bankruptcy by exploring the alternatives to bankruptcy.

The Good

The obvious advantage to bankruptcy is that once you have declared yourself bankrupt, your creditors can no longer hassle or pursue you to recover their debt (unless it is a non-provable debt in bankruptcy). Essentially, all provable debts will be wiped clean and your appointed trustee will deal with your creditors. The good news is that your creditors will stop calling you!

The Bad

The impact on your ability to borrow will have a last effect for at least 7 years and you will be subject to other restrictions and obligations.

It’s not the end of the world

It is important to remember that many people declare bankruptcy and end up living full and successful lives. It is not the end of the world and you should not be ashamed if you have fully explored all options available to you before filing for bankruptcy. If your debts are truly unmanageable bankruptcy may be the only way out of the debt spiral. There are many stories of people who have gone bankrupt and ended up running very successful businesses.We have advised thousands of Australians on whether or not bankruptcy was the right option for them. To speak to one of our bankruptcy consultants, call today or fill in our contact form and we will get back to you.

Advice from the Australian Bankruptcy Service is available on our toll free telephone line is open 24 hours everyday / 7 days a week on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

Personal bankruptcy is never a decision that is to be taken lightly. It is almost always the very last resort for someone in financial distress. Typically people facing personal bankruptcy struggle to sleep at night with the thought of unpaid bills weighing on their mind. The pressure usually mounts from the constant phone calls from creditors and the bill reminders arriving in the mail.

It is best to act now before it becomes too late to file for personal bankruptcy on a voluntary basis. Here at the Australian Bankruptcy Service we specialize in personal bankruptcy applications.

Personal Bankruptcy can be caused by many reasons but the most common reasons are:

• Divorce;
• On-going medical expenses;
• Loss of income for a sustained period;

Many people still struggle with the stigma which society once placed on un-discharged bankrupts. In the modern world the stigma of bankruptcy is significantly less than what it used to be.

In most cases bankruptcy only lasts three (3) years so if you are struggling with insurmountable debt it may be best that you file for bankruptcy as soon as possible so you can start afresh.

Personal bankruptcy can actually provide a significant amount of relief to people truly in need. It is most appropriate for people on a low to moderate income with few or no assets. Personal Bankruptcy is available for all Australians with unsecured debt which they cannot repay. Bankruptcy will stop the threatening phone calls from creditors and the constant bill reminders from creditors.

You can also rest assured that personal bankruptcy doesn’t mean you will always have bad credit as your credit file will be restored after approximately 7 years. In most cases you will be able to start afresh after 7 years with a clean slate.

And you don’t have to worry about losing all of your assets either as essential assets like your motor car and household furniture will be protected (subject the statutory limits prescribed by the Bankruptcy Act).

The decision to file for personal bankruptcy is never easy. That’s why you should only get the assistance from a qualified bankruptcy expert like our consultants at the Australian Bankruptcy Service. We have highly trained experts ready to help you. If you are considering personal bankruptcy, call us today on 1800 462 767. Our toll free telephone line is open 24 hours everyday / 7 days a week.

All calls are free, entirely confidential and if required, anonymous.

Are you thinking about declaring bankruptcy but have some questions about how you go about it? We can help.

Before going bankrupt, it is important that you consider many factors, including if it is right for you, whether it will be successful, or if there are other options available for you to tackle your debt problems.

If you do decide to go bankrupt, the first thing you need to do is complete the bankruptcy forms.

Here at the Australian Bankruptcy Service we can help you complete and lodge these forms for a fee starting from $600 – so we take care of all the stress and hassle for you.

It is important that these forms are filled in accurately and completely. Completing these forms incorrectly can lead to a disastrous outcome including the extension of your bankruptcy from the usual 3 year period. Learn more about how a professional form completing service is important.

Once your forms are completed and signed, you will need to lodge them with AFSA. Before you lodge your forms you have 2 choices to consider:

1. You can appoint the government trustee at AFSA (or officially known as the Office Trustee),
to manage your bankruptcy; or
2. You can appoint a privately registered trustee. Here at the Australian Bankruptcy Service we have a registered trustee on site who can manage your bankruptcy privately. To help you pay for this service we have reduced it to a low weekly fee (starting from $80 per week (on a voluntary basis)). This means you can speak to the very person who will be looking after you during the course of your bankruptcy, and ask any questions you may have before committing to bankruptcy. To learn more about our bankruptcy trustee service, click here.

Once the forms have been lodged with AFA, they will need to be reviewed by the official receiver at AFSA. It is the role of the official receiver to approve or deny the petition for bankruptcy.

If you have utilized our bankruptcy form filling service we will be able to make sure that you only submit forms that are going to be accepted.

If you are thinking about going bankrupt, advice from the Australian Bankruptcy Service is available on our toll free telephone line 24 hours everyday / 7 days a week on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

People often wonder if a creditor can force them into bankruptcy. The short answer is yes but, like most of the procedures and laws surrounding bankruptcy and insolvency, the full answer is a bit more complicated.

A creditor can only force someone into bankruptcy by applying to the Court. The Court will look at the request made by the creditor and, if all the conditions have been met.

This option is only used as a last resort for creditors and so the process that must be met for someone to force you into bankruptcy is quite detailed.

Initially, a creditor must have obtained a judgment against you in the last 6 years for an amount of at least $10,000. If this condition is met, the creditor can approach AFSA and apply for a bankruptcy notice to be issued. This notice will give you 21 days to repay the debt owed to you. If you fail to meet this obligation, the creditor can then apply to Court for a creditor’s petition to be issued against you.

Once a creditor’s petition has been issued by the Court, a hearing will be set by the Court. At the hearing, if the Court decides that you have not fulfilled your obligations and paid the creditor, the Court can issue a sequestration order which makes you bankrupt. The Court will also appointed a trustee to administer your bankrupt estate.

If a creditor obtains a bankruptcy notice or a creditor’s petition against you, we strongly recommend that you speak to a qualified expert immediately upon receipt. Nobody wants to go through Court or have a sequestration order issued against them, but many people do not know the options available to them that might help them avoid such a difficult situation. At the Australian Bankruptcy Service, we have highly qualified staff ready to take your call. Call now on our toll free telephone line 24 hours everyday / 7 days a week on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

Don’t be embarrassed to talk about bankruptcy.

At the Australian Bankruptcy Service, we speak to many people about their financial problems. One of the common things we hear people say is that they were too embarrassed to talk about their situation.

This is understandable.

For most of life’s problems, talking to friends and family is more comfortable. But when it comes to serious financial difficulties and solutions like bankruptcy, it seems that many people carry too much shame to bring it up with people closest to us.

The real problem is that serious financial issues cannot be solved if you ignore them.

If you are too embarrassed to discuss your looming debt problems with friends or family, speaking to a stranger who doesn’t know you might be a great first step for you to take. Many people say to us that they wished they had picked up the phone and called us sooner. It is usually like lifting a weight off your mind to actually talk to someone about it. Our experienced bankruptcy advisors have the knowledge and expertise to be able to provide you with the advice you need in a friendly and non-intrusive manner.

If you act soon enough, you may be able to explore options apart from bankruptcy. Call today if you wish to explore your options.

Remember don’t be embarrassed to call and discuss your options – we are here to help you. Our staff are ready to help you, and have helped thousands of other Australians in situations just like yours.

Advice from the Australian Bankruptcy Service is available on our toll free telephone line 24 hours everyday / 7 days a week on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

The decision to declare bankruptcy is a very personal one. Not only does it affect everyone differently, but everyone has very different feelings about it. Depending on your circumstances, it could either be something that should be avoided if possible, or a prudent financial decision.

The first thing to consider is whether or not declaring Bankruptcy would have any tangible effects on you, that is, on your assets or employment. Do you have a property, or maybe a vehicle or something else of value, that has available equity in it? If so, it is safe to assume that these things would be sold and the proceeds put towards your bankrupt estate. Do you need to hold a license that is specific to your trade? Or do you have a clause in your employment contract stating that you cannot go bankrupt? It is not the case for most, but some people can have their means of earning a living affected by declaring bankruptcy. If you fall into either of these categories, you will most likely want to try avoiding bankruptcy, and may want to consider a Debt Agreement or a Personal Insolvency Agreement as a solution to your debt problems.

If you do not have assets that you want to keep, or if your employment is not going to be affected by bankruptcy, then your main concerns would be the effect on your credit rating and/or the social stigma of bankruptcy. If this is the case, then you need to weigh these things up against your capacity to pay and your quality of life. Declaring bankruptcy will place a default on your credit file for seven years, which can seem like a long time. Many people are concerned about not being able to gain more credit during this time, or maybe a home loan. You have to ask yourself, though: do you want even more debt? If you continue on the way you are for another seven years, do you think that you will have managed to completely pay out your current debt? And are you actually going to be in a position to save a deposit and add a home loan to your commitments? If the answers to these questions are “no”, then Bankruptcy might be a worthwhile option for you.

Bankruptcy is obviously more complicated than this and there are many factors that may affect you that you will need to consider before making a decision. Therefore, we always recommend that you seek professional advice first so that you can make an educated decision. The consultants at the Australian Bankruptcy Service have years of experience in advising people about bankruptcy, and we also have a Registered Trustee in Bankruptcy on site, so you can trust that our advice is going to be 100% accurate.

Advice from the Australian Bankruptcy Service is available on our toll free telephone line 24 hours everyday / 7 days a week on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

When considering bankruptcy , there are two main concerns that one needs to consider. The first is whether there are any assets that could be sold during the bankruptcy, such as your house or your motor vehicle. The second is whether it can affect your means of earning a living. For the majority of people, this second concern is of little consequence. There are some people, though, that will have to consider potential effects of bankruptcy on their job prospects.

Contract Clauses

Some people, in particular those who work in finance, or maybe gaming, might have a clause in their contract stating that they will lose their job if they declare bankruptcy. If you are concerned that your employment contract might contain such a clause, it should be an easy matter for you to check with your HR department.

Licenses

Do you need to hold a specific license to be able to carry out your job? Before you consider bankruptcy, you should call your relevant licensing authority and find out whether it might cause your license to be suspended. A fairly detailed list of associations and licensing authorities that may have rules concerning bankruptcy can be found here

Credit Checks

If a potential employer was to check your credit file, they would see a default that is placed there for 7 years as of the date you go bankrupt. They could also check the National Personal Insolvency Index, which is a permanent record.

Self-employment

Being a bankrupt person can have an effect on the way that you run your business, either as a sole trader or in a partnership. For more details on running a business whilst bankrupt, please refer to.

Directorships

If you are a bankrupt person, you are automatically disqualified from managing a company as a director, unless you receive approval from the court. Once you have been discharged from your bankruptcy you will be able to apply to be reinstated as director.

If you are considering bankruptcy and you fall into any of the above categories, you need to seek professional advice before making a decision. At the Australian Bankruptcy Service our trained consultants work under the supervision of our in house Registered Trustee in Bankruptcy, so you can be assured that you will receive the most accurate information from them. Call today on 1800 462 767 and find out how bankruptcy might affect your job prospects.

Many people we speak to here at the Australian Bankruptcy Service have found themselves in financial trouble due to unpaid business debts. If you have or had a business and you have become personally liable for any debts of the business, then we recommend that you read this post very carefully.

Becoming personally liable for a business debt can be a double whammy. Not only could you lose your business but if you have gone into debt to fund the business (or you have provided a personal guarantee for a business debt) then you will be personally liable in the event that the debt is not paid by the business.

You may also become personally liable for a debt to the Australian Taxation Office if you were a director of the business and you received a director’s penalty notice.

If you have creditors that are demanding payments or threatening legal action then you need to seek professional help immediately.

The situation becomes far more complex when you have a combination of business debts and personal debts and we recommend that you obtain advice from a business debt advisor. We also have business debt advisors who can assist, call now on 1800 462 767. Our toll free telephone line is open 24 hours everyday / 7 days a week.

All calls are free, entirely confidential and if required, anonymous.

You can become bankrupt in Australia several ways, either

• Voluntary by filing a debtor’s petition with AFSA; or
• The court can declare you bankrupt which is known as a creditor’s petition

Voluntary bankruptcy application – debtor’s petition

You can file a voluntary bankruptcy application with the Official Receiver at AFSA. This method is known as a Debtors’ Petition. In order for AFSA to accept your voluntary bankruptcy application you need to be insolvent (Section 55 of the Bankruptcy Act) and you need to be present in Australia or have a current address in Australia.

To file a voluntary bankruptcy application you can download the forms from the AFSA web site.

Alternatively, we offer a service to assist you with the bankruptcy application from $600. To eligible people this fee can be paid over 6 instalments of $100 each.

The AFSA registry may reject a bankruptcy application if the following factors are present:

• You are not ordinarily resident in Australia (Section 55 2A of the Bankruptcy Act); or
• Your statement of affairs or debtors’ petition is not complete (Section 55(3) of the Bankruptcy Act); or
• The Official Receiver believes (based on the information contained with your statement of affairs) that
  you have the capacity to pay all debts immediately or within a reasonable period of time (Section 55 3AA of the Bankruptcy Act).

The most critical issue is that you are a permanent resident of Australia and the debts listed in your statement of affairs are provable debts in bankruptcy.

Can I appoint a Trustee in Bankruptcy myself?

If you file a debtor’s petition (ie you voluntarily file for bankruptcy) you can elect to appoint a Registered Trustee of your choosing or the Official Trustee.

We have a Registered Trustee on site (ie a Private Trustee) who can consent to act as your Bankruptcy Trustee and will administer your estate subject to our terms and conditions. We provide high service levels of which we are proud of.

Registered Trustee

A Registered Trustee in Bankruptcy is a suitably qualified accountant in private practice with many years experience in bankruptcy administration.

Official Trustee

The Official Trustee is the AFSA government agency who administers bankrupt estates in public practice.

Contact us to discuss our bankruptcy service

If you would like to file for bankruptcy on a voluntary basis call the Australian Bankruptcy Service on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

You can become bankrupt in Australia several ways, either you can file for bankruptcy voluntarily and file a debtor’s petition or you can be made bankrupt by the Court which is known as a creditor’s petition.

Court Bankruptcy – creditor’s petition

You can be made bankrupt by the bankruptcy court if a creditor files a creditors’ petition. A creditor can apply to court for a sequestration order (Section 43 of the Bankruptcy Act) by filing a creditor’s petition with the Federal Court of Australia. The bankruptcy court will accept the application if you have failed to comply with a bankruptcy notice. A creditor may only file a creditors petition, if

• the petitioning creditor is owed at least $5,000; and
• you have committed an act of bankruptcy within the last 6 months; and
• the petitioning creditor has issued a bankruptcy notice which you have not complied with; and
• A creditor applying to the bankruptcy court for a sequestration order may appoint a trustee of their choosing.

Who appoints the Trustee in bankruptcy?

With a court bankruptcy the creditor who files the creditor’s petition with the bankruptcy court will usually obtain a consent to act from a Registered Trustee. It is important to observe that the creditor applying to court for your bankruptcy will therefore have full control over selecting and appointed the Trustee in Bankruptcy. If the creditor does not obtain a consent to act from a Registered Trustee, then the Official Trustee from AFSA will automatically be appointed when the sequestration order is made. The Official Trustee from AFSA can then outsource the appointment to a Registered Trustee at their discretion.

If you would like to avoid becoming bankrupt by way of a creditor’s petition call the Australian Bankruptcy Service on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

Becoming a Bankrupt person, whether ofyour own choosing or not, is never a pleasant experience. Even if it is the best option for you and can actually improve your day-to-day life, the social stigma of Bankruptcy is felt very keenly by many people. It is desirable, then, for the process to go as smoothly as possible, and choosing the right Bankruptcy Trustee is an important part of this.

The only point at which you can choose your own Bankruptcy Trustee is right at the beginning, and it is only an option if you make yourself a Bankrupt by lodging a Debtor’s. Once you are Bankrupt, it is only your creditors or the Trustee who can initiate a change of Trustee.

This change can occur in one of two ways:

1. The Trustee agrees to the change & issues a notice under Sect 181A of the Bankruptcy Act. The change of trustee will occur unless a creditor objects in writing before the date outlined in the notice; or

2. The creditors force a change of Trustee by requesting that the incumbent Trustee call a meeting of creditors to vote on the change. The meeting of creditors to vote on a change can be initiated by a creditor (or a group of creditors who hold at least one quarter, ie 25% of the total debts in the estate). The authority for the creditors is contained in Sec 64 (1) of the Bankruptcy Act. Once the meeting is called, all creditors will be asked to vote on the change of trustee under Sec 181 of the Bankruptcy Act and if fifty precent (50%) of the creditors voting approve the change, then it will occur.

So if you are having difficulties with your Bankruptcy Trustee you are, unfortunately, powerless to change unless you can either convince them to step down, or your creditors force the change because they are also unhappy with the way your Bankruptcy is being administered.

If you are considering bankruptcy and wish to choose your own Trustee, then, you will want to make sure that you choose the right one from the very beginning. Some enquiries you can make of any prospective Trustees are:

• How long have you been registered with AFSA?
• How long have you been operating in the industry?
• What qualifications do you hold?
• Who will be responsible for handling my case?
• Will I be assigned a dedicated manager who I can liaise with as the need arises?

If you are considering appointing a private trustee, call our trustee at the Australian Bankruptcy Service on 1800 462 767.

Statement of Affairs

A Statement of Affairs is a document that forms part of the forms you must fill in as part of the process of declaring bankruptcy. This document contains all details relating to your financial situation and your personal details.

Specifically, a statement of affairs has two parts:

Part A
In the first you will need to list all debts owed and to whom they are owed. This must be comprehensive, as neglecting to disclose any debts can result in your bankruptcy being extended.

Part B
The second part must list all of your assets. This includes all property of value, cash deposits, vehicles and so on. Again, if you are declaring bankruptcy you must ensure that all your personal assets are included in your statement of affairs.

Due to the nature of Bankruptcy, it is crucial that a Statement of Affairs is filled out properly and accurately, with all relevant details included. It may be a sound idea, to get your bankruptcy forms filled by a bankruptcy expert. At Bankruptcy Australia we can help you complete the forms properly and professional for a fee starting from $600.

Debtor’s petition

The second form that must be completed as part of a bankruptcy application is called a Debtor’s Petition. AFSA will require this form if you wish to file for bankruptcy on a voluntary basis. Once this form has been filled out you will need to file it with AFSA. AFSA will usually process it within a few days and you will then become bankrupt.

Our Service

We offer the lowest fee to assist you with completing the forms. Our fee starts from $600. We will help you make sure that your Statement of Affairs and Debtor’s Petition is completed correctly so your bankruptcy application is smooth sailing. If you incorrectly complete the Statement of Affairs your bankruptcy can in some cases be extended. Our service ensures that the paperwork is completed correctly from the beginning.

If you would like to speak to an expert in bankruptcy, we operate a toll free advice line – 7 days a week. Call the Australian Bankruptcy Service on 1800 462 767.

We specialise in helping Australians prepare and process Bankruptcy Applications.

If it is the first time you have applied for bankruptcy in Australia, you may find the process daunting and you may not know where to start.

At the Australian Bankruptcy Service we make the process straightforward and stress free and as soon as you have provided us with all of the necessary information we can have your application prepared and processed within 2 to 3 weeks or earlier for an urgent application. We can stop the threatening and stressful phone calls from creditors. We will prepare and process all of the paper work for your bankruptcy application. All you need to do is to provide us with your personal details and details of the amounts you owe. If you own any assets you will also need to provide details of these. We will explain to you if you can keep any of these assets.

It is important that you complete your bankruptcy application carefully and honestly as you can be penalised for not providing all of the necessary information which may result in your bankruptcy term being extended.

The Australian Bankruptcy Service is operated by a very respected and fully qualified bankruptcy professional. Our managing director is a Chartered Accountant and a Registered Trustee in Bankruptcy.

We recommend that you only deal with highly qualified and trained bankruptcy professionals. Do not deal with companies that are not registered bankruptcy trustees with AFSA.

Whenever you seek personal insolvency advice, make sure you ask the company the following questions:

• do you have a have Registered Trustee in Bankruptcy on staff?
• how are you qualified to provide a complete bankruptcy service?
• what are your bankruptcy qualifications?
• are you qualified to administer my bankruptcy directly?

Advice from the Australian Bankruptcy Service is available on our toll free telephone line
24 hours everyday / 7 days a week on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.

Creditors must stop chasing you

If you file for bankruptcy and it is accepted by the AFSA your creditors can no chase you to recover unpaid debts. All communications will be handled by your bankruptcy trustee.

To ensure that your bankruptcy is accepted by AFSA the first time we recommend using a professional bankruptcy form filling service such as the one we offer. For a fixed price you can have your forms filled in by a professional bankruptcy expert. This will practically guarantee that your bankruptcy is accepted and your forms are filled in correctly.

Your debts are written off

All provable debts will be written off forever. Regrettably for some people (debts like HECS and childcare liabilities are not written off with bankruptcy, which means you will still need to pay these debts).

No More Stress

Bankruptcy will definitely reduce your stress. It will stop the threatening calls & letters. Whilst bankruptcy comes with conditions & consequences which must be adhered to, many people who go bankrupt tell us later that they felt relieved & stress free after making the decision.

Know and follow the rules

Don’t try to defeat or trick your creditors or trustee in bankruptcy. Despite the risks, some people still try to hide assets or transfer the ownership of assets to family or relatives before going bankrupt. The Bankruptcy law anticipates this type of behaviour and transactions which are entered into to defeat creditors can be reversed.

Your bankruptcy term can also be extended from the usual 5 year period to 8 years. To fully understand the rules of bankruptcy read this site very carefully.

If after reading this site you have unanswered questions, please call us direct on 1800 462 767. At the Australian Bankruptcy Service, we have an experienced bankruptcy trustee on site who will be able to make sure you get the best possible advice before declaring bankruptcy.

You will be entitled to keep your motor vehicle if (at the date of bankruptcy) it is worth less than $9,400. If your motor vehicle is worth more than $9,400 your Trustee in Bankruptcy would be entitled to sell the motor vehicle, however, the Trustee would need to provide you with the protected amount ($9,400) from the sale proceeds.

If your motor vehicle is assessed to be worth more than the protected amount ($9,400) then it would be best to try and reach agreement with your Trustee in Bankruptcy to pay the amount which exceeds the protected value. A bankrupt cannot own assets so your spouse or a family member would need to purchase the vehicle from the Trustee in Bankruptcy and pay the excess amount over the protected value. For example if you became bankrupt and your motor vehicle was assessed to be worth $10,000, then your spouse or a member of the family could offer to buy the vehicle from the Trustee in Bankruptcy for approximately $900 ($10,000 – $9,400).

At the time of becoming bankrupt, you are entitled to keep $2,000 from the proceeds in your bank account (applying the AFSA Bankruptcy administration practice note). Therefore if you have more than that amount in your account at the date of bankruptcy, then the Trustee in Bankruptcy would be entitled to claim the excess amount. For example if you had $3,000 in your bank account at the date of bankruptcy, then your Trustee in Bankruptcy could claim $1,000 from your bank ($3,000 – $2,000).

You will be entitled to keep your tools of trade (at the date of bankruptcy) if they are worth less than $4,350. If your tools of trade are worth more than $4,350 (collectively) your Trustee in Bankruptcy would be entitled to sell them, however, the Trustee would need to provide you with the protected amount ($4,350) from the sale proceeds.

Bankruptcy anticipates a minimum standard of living and as such as a bankrupt you will be entitled to retain certain assets subject to statutory limits. These limits are indexed and updated by AFSA every six months.
The assets which you will be able to retain (ie they will be protected under bankruptcy) include:

• Cash at Bank – limit of up to $2,000
• Motor vehicle – limit of up to $9,400
• Tools of trade – limit of up to $4,350
• Superannuation
• Household goods and clothing

A Trustee in Bankruptcy must investigate the financial affairs of a bankrupt to establish if the bankrupt entered into transactions which would be void as against the Trustee in Bankruptcy.Sections 120, 121 & 122 of the Bankruptcy Act sets out the types of transactions which may be void as against the Trustee in Bankruptcy.

Undervalued Transactions

Section 120 of the Bankruptcy Act allows the Trustee to “claw back” certain transactions where that transaction involved a transfer of the bankrupt’s property for less than its value.

Transfers to Defeat Creditors

Section 121 of the Bankruptcy Act allows certain transfers of assets to be voided where that transfer was intended to prevent that asset from becoming available to creditors of the bankrupt estate. There is no time limit involved but the Trustee must be able to show that the bankrupt was, or was about to become, insolvent.

Preferential Payments

Section 122 of the Bankruptcy Act allows certain payments made to creditors within the 6 months before the commencement of the bankruptcy to be recovered by a Trustee, should those payments prove to be “preferential” to the recipients.

If you or your spouse are contemplating bankruptcy and you want to understand what transactions a trustee will a trustee investigate, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.

Vesting of property

Any property belonging to the bankrupt at the date of bankruptcy automatically vests in the Trustee in Bankruptcy (Section 58 of the Bankruptcy Act).

Trustee to take possession of property

A Trustee in Bankruptcy must take control of the bankrupt’s property including any books and records of the bankrupt (Section 129 of the Bankruptcy Act).On application by the Trustee in Bankruptcy the court may enforce the Trustee’s rights to take possession of property.

Any person holding books and records of a bankrupt is not entitled to withhold possession of the books and records from the Trustee in Bankruptcy.

A Trustee in Bankruptcy is not to take possession of protected property (Section 116 of the Bankruptcy Act), which includes:

• motor vehicles worth less than the prescribed value (currently $9,400); or
• tools of trade worth less than the prescribed value (currently $4,350); or
• personal property of the bankrupt of sentimental value; or
• other property identified to be protected by a special resolution of creditors.

Admit provable debts to distribute in accordance with priorities

Provable debts

All debts and liabilities owing by a bankrupt at the date of bankruptcy (excluding non-provable debts) are provable in the bankrupt estate (Section 82 of the Bankruptcy Act). The exception to this rule is non-provable debts. Non-provable debts are debts are defined as debts such as:

• monies payable under a maintenance agreement;
• monies claimed as un-liquidated damages (ie an amount demanded as a result of a car accident);
• monies owing as a result of a court imposed fine;
• monies owed under the HECS scheme;
• monies owed under a proceeds of crime order;
• monies owed for interest after the date of bankruptcy

A provable debt needs to be submitted to the Trustee in Bankruptcy in the prescribed form (being a Proof of Debt in accordance with Section 84 of the Bankruptcy Act).

Distribution of funds

A Trustee in Bankruptcy must distribute any surplus funds to creditors strictly in accordance with Sections 109 and 140 of the Bankruptcy Act. Prior to any distribution of funds to creditors a Trustee in Bankruptcy is entitled to be remunerated in accordance with Sections 161B or 162 of the Bankruptcy Act.

What duties does a Trustee in Bankruptcy have?

A Trustee in Bankruptcy has fiduciary obligations to creditors and the bankrupt, however Section 19 of the Bankruptcy Act sets out statutory duties of a Trustee in Bankruptcy. These duties can be summarized as follows:

• notify the creditors of the bankruptcy
• determine whether the estate has any property that be can realized to pay a dividend to creditors
• report to creditors on the likelihood of creditors receiving a dividend
• provide information about the estate as creditors reasonably request it
• determine whether the bankrupt has made any transfer which is void as against the trustee in bankruptcy
• take appropriate steps to recover property for the benefit of creditors
• take appropriate action to try and ensure that the bankrupt discharges their obligations under the Bankruptcy Act
• consider if the bankrupt has committed an offence under the Bankruptcy Act
• refer to the Inspector General in Bankruptcy any evidence of an offence the bankrupt has committed under the Bankruptcy Act
• administer the estate as efficiently as possible by avoiding any unnecessary delay
• exercise powers and perform functions in a commercially sound way

Section 173 of the Bankruptcy Act states that a Trustee in Bankruptcy must maintain proper books and records to exhibit a full and correct account of the administration of the estate and the Trustee shall allow any creditor to inspect the records at any reasonable time.

Section 177 of the Bankruptcy Act states that a Trustee should also have regard for any lawful direction as resolved by creditors at a meeting of creditors.

If you or your spouse are contemplating bankruptcy and you want to understand more about the role and duties of a Trustee in Bankruptcy, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.

Bankruptcy has a strong social stigma but has been terribly misunderstood for years. The problem is that the people who have actually been through a Bankruptcy are rarely the ones to talk about it. If you are considering Bankruptcy, it will help you to have a good understanding of exactly what happens, minus the scaremongering of social pressures.

A Bankruptcy will wipe out your unsecured debts, meaning your credit cards and personal loans; anything that does not have an asset attached to it which could be sold if you did not pay. It generally lasts for three years, during which time your unsecured debts are held in limbo, like being placed on a shelf. It is your Bankruptcy Trustee’s job to try to recover whatever money they can from you during those three years, which is then put towards your debts and the associated costs of your Bankruptcy. At the end of your Bankruptcy period any remaining debt gets wiped out, and you are no longer legally liable for those debts.

The most common misconceptions about Bankruptcy revolve around the Trustee’s obligation to recover whatever available funds they can. Most people think that they “will lose everything”, but this is far removed from the truth. Firstly, the laws that govern Bankruptcy insist that a Bankrupt person still be able to maintain a comfortable standard of living. And secondly, not all funds are actually available or worthwhile to be recovered.

There are two main ways in which a Bankruptcy Trustee can recover money to be put towards your Bankrupt estate, the first of them being through the sale of assets. If you have a home with available equity in it, this will be sold. This also applies to other major assets you may have such as a car or a boat. If the asset is still subject to a loan, however, and the balance of the loan exceeds the value of the asset, there is no point in the Trustee selling it. And when it comes to a vehicle, there is actually a certain amount of equity that you are allowed to have in it and still be able to keep it. If the available equity is over this amount, the vehicle would be sold and the allowed amount remitted to you so that you can purchase a less expensive vehicle. If you are in possession of any valuable antiques or overly expensive household goods, these would be sold, but your general household goods of a reasonable value are protected.

The second main way in which a Bankruptcy Trustee can recover money from you is through your income. Many people are of the belief that you are “not allowed to earn any money” but again, this is untrue. You can earn as much as you are able to, but if you start to earn over a certain amount, you will be required to contribute a portion of that towards your Bankruptcy. If you come into possession of a windfall of funds during the three years of Bankruptcy, say from a lottery win or an inheritance, your Trustee will be obligated to apply those to your estate as well.

As you can see, the situation under Bankruptcy is not quite as dire as many people make out. You can still earn a living, you can keep your household goods, and you can still own a reasonably priced vehicle. Some people even go through Bankruptcy without noticing any ill effects at all. The outcome is dependent on you and your own individual circumstances.

You can find more information on our Bankruptcy Portal. If you have a question which we haven’t addressed, please call our bankruptcy consultants for one-on-one advice on 1800 462 767. Our team has years of experience in dealing with Bankruptcies and other insolvency appointments, and we have a Registered Trustee in Bankruptcy on site and available to share his expertise. Call us on 1800 462 767 for in-depth advice on Bankruptcy and how it might affect you.

All calls are free, entirely confidential and if required, anonymous.

In our years of helping Australians with their personal debt problems, we have yet to come across anyone who was particularly happy about the choice to declare Bankruptcy. Aside from the actual process, which can feel a bit invasive to some, there is also the social stigma that comes with Bankruptcy, which can leave people feeling unjustifiably ashamed. This sense of shame becomes even worse when one worries about how their own Bankruptcy is going to affect their personal relationships. The good news, though, is that your Bankruptcy needn’t affect the people who are close to you, or if it does, it may only be minimal. Bankruptcy in Australia is a sole act, something that can only be done by individuals, not couples, and as such it really only affects the individual. Your partner/family member/friend will not receive a mark on their credit file because of your Bankruptcy, or have any of your Bankruptcy restrictions placed on them.The only ways in which your partner/family member/friend would be affected by your bankruptcy are if:

• You have joint debts together – they will not be penalised in any way, but they will become solely liable for the entire amount of the joint debt; the banks do not split the amount owing in half.
• You have jointly owned assets with equity available in them – even if an asset is held in two names, if there is equity available in it, it will be sold. The non-Bankrupt party would have their share of the equity returned to them in cash, and your share would become a part of your Bankrupt estate. Alternatively, the non-bankrupt party could make an offer to purchase your share in the asset from the bankrupt estate.
• You are in business together – being Bankrupt can affect the way that you do business.

If you need to declare Bankruptcy, you need not worry that it is going to directly affect the financial situations of those close to you. Bankruptcy, on the whole, is a completely individual and personal matter. But depending on your circumstances, there may be some side effects of Bankruptcy that will inadvertently impact people with whom you share assets, a business, or joint liabilities. An experienced debt advisor will be able to explain to you all of the consequences of declaring Bankruptcy and how they relate to your individual situation. Call us today on 1800 462 767 for free and impartial advice on how Bankruptcy might affect you and your loved ones.

Section 177 of the Bankruptcy Act states that a Trustee should also have regard for any lawful direction as resolved by creditors at a meeting of creditors.

If you or your spouse are contemplating bankruptcy and you want to understand how bankruptcy my affect your personal relationships, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.

Automatic discharge signifies the end of bankruptcy and occurs 3 years and 1 day after your Statement of Affairs was lodged and accepted by the official Receiver at the Australian Financial Security Authority  (AFSA). The discharge is a process of law that officially concludes the legal status of bankruptcy against the bankrupt. As the discharge is automatic, the Registered Trustee or AFSA do not need to apply for the bankrupt to be discharged nor is there any fee. Your Registered Trustee should provide you with a certificate of discharge as a matter of course, however, if you do not receive one, you may search the public record otherwise known as the National Personal Insolvency Index (NPII) database.

Whilst automatic discharge is most commonly granted, there are cases where an objection to discharge may be lodged if the bankrupt has been uncooperative during the period of the bankruptcy.

The grounds on which an objection can be lodged vary but may include: failing to pay income contributions, failing to disclose all debts or failing to advise the trustee of an address change.

If the reasoning behind the objection is proven to be valid, the bankruptcy will be extended to either five or eight years. Click here to read how your bankruptcy can be extended.

Once discharged the bankrupt has a legal obligation to continue assisting the trustee until all administration matters connected to the bankrupt estate has been completed and finalised.

If you or your spouse are contemplating bankruptcy and you want to understand how you get discharged from bankruptcy, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.

Do you have a rental property and you are unsure how the income will be dealt with in bankruptcy? We are often asked about what happens to rental income in bankruptcy, so we have prepared this post to answer the most common questions.

Can I keep rental income from an investment or rental property?

The short answer is no! When you declare bankruptcy all property will vest in the Trustee in Bankruptcy (except protected property). Property which vests in the Trustee in Bankruptcy must be realised for the benefit of creditors and this includes rental income from a rental or investment property.

How can I protect rental income during bankruptcy?

If the rental property is registered in your name (and you declare bankruptcy), then unfortunately you will not be able to protect the rental income. However, if the rental property is registered in joint names (ie in your name and your spouses’ name) then your spouse would be able to make an offer the purchase the equity in the rental property. If your Trustee in Bankruptcy accepted this offer, then all future rental income could be paid directly to your spouse.

If you are thinking about bankruptcy and are concerned about your rental income, there may be other options. At the Australian Bankruptcy Services we have a registered trustee in bankruptcy on site who can answer your more complex questions. Call today on 1800 462 767 if you have a rental property and are considering bankruptcy.

If you or your spouse are contemplating bankruptcy and you want to understand how will bankruptcy may affect yourrental income, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.

The Bankruptcy Act sets out a regime for the assessment of income whilst you are bankrupt. Subject to criteria you may become liable to pay compulsory income contributions for 3 years whilst you are bankrupt.

Bankruptcy Income & The Statutory Thresholds

There is no limit on the level of income which a bankrupt can earn. However, if you exceed the statutory thresholds (as listed below), you will pay 50% of your after tax bankruptcy income which exceeds the statutory thresholds. The bankruptcy thresholds (which are listed below) are based on the number of dependants you have. A dependent is defined as a person who is dependent on the bankrupt for financial support and doesn’t earn more than $4,406 p.a.

*current as at March 2024

Feel free to use our income contribution calculator to see if you may be liable for compulsory contributions. This calculator should only be used as a guide. If you are already bankrupt and you are seeking clarification on an assessment you have received from your Trustee, we recommend that you speak directly with your Bankruptcy Trustee or Bankruptcy Regulation at AFSA.

Income Contribution Calculator

What income is assessed?

A bankrupt’s derived income is to be assessed under the income contribution regime. Income in bankruptcy can be deemed to be derived even if the bankrupt hasn’t actually received the income (refer to Inspector General in Bankruptcy –v- McGushin [2009 FCA 662). The Trustee in Bankruptcy will issue an income contribution assessment as soon as practicable after the beginning of each contribution assessment period. A Trustee in Bankruptcy will therefore typically issue 3 assessments, however, if the bankruptcy term is extended more assessments could be issued.

The following are examples of the types of income which will be included in the income assessment:

• Annuity or pension from an superannuation fund
• Termination pay
• Annuity or pension from an insurance fund
• Income from a trust fund
• Fringe benefits
• Income provided to a third party other than the bankrupt

What income is excluded from an assessment?

The following are examples of income which is not included in an income contribution assessment:

• Child Support or similar maintenance payments
• An amount received pursuant to the Social Security Act
• Legal Aid Scheme payments
• Family Tax benefits

What type of evidence can a Trustee obtain to assess income?

A Trustee in Bankruptcy may call for supporting information when conducting an income contribution assessment. The type of information the trustee may call for could be:

• Payslips
• Bank Statements
• Group certificates
• Tax Returns
• ATO notice of assessments
• Contract of employment
• Pension or allowance statement
• Business Activity Statements
• Financial Statements

For a self employed bankrupts, the Trustee in Bankruptcy may need to scrutinise these documents in more detail as the Trustee is entitled to deny a deduction for depreciation and donations for the purposes of income contribution assessments.

Fringe Benefits – are they included in the assessment?

If a bankrupt received Fringe benefits (as defined by the Income Tax Assessment Act) then the value of those benefits will be included by Trustee in the income contribution assessment.

The Fringe benefit does not need to be provided by the bankrupt’s employer for it to be assessed as income. The Fringe benefit may be provided by a third party (refer to Skalkos v Nicols [2009] FCA 346). In that case, the court said “it is now quite clear what is included is a benefit that is provided in any circumstances by any person to a bankrupt”.

The following is a list of the most common type of Fringe benefits which would be included by a Trustee in an income contribution assessment:

• Provision of Motor Vehicle
• Debt Waiver
• Interest free or below market interest loan
• Expense payments (such as educational expenses)
• Provision of free or low cost housing
• Provision of free or low cost air travel

The Bankruptcy Act exempts free or low cost housing as long as the value of the housing does not exceed $250 per week.

Review of income assessment

If a bankrupt does not agree with the assessment made by the Trustee, then the bankrupt must make an application to the Inspector General in Bankruptcy (IG) within 60 days of receiving the notice of assessment from the Trustee. If the bankrupt is dissatisfied with the IG’s decision, then the bankrupt can make an application to the Administrative Appeals Tribunal.

Collection of Income Assessments

If a bankrupt fails to pay the income contributions (as assessed) by the Trustee, then the Trustee can make an application to the Official Receiver under Section 139ZL and garnishee the bankrupt’s wages. The value of the garnishee could be approximately 20% of the bankrupt’s wages until the outstanding contributions are paid in full.

Furthermore, if the bankrupt fails to pay the income contributions (as assessed) by the Trustee, the Trustee can file an objection to the bankrupt’s automatic discharge. This could result in the bankrupt’s bankruptcy term being extended to 8 years in total.

Restrictions on advice & assistance

This area of bankruptcy law is very complicated and this site only provides an outline of the key aspects of the regime. If you are already bankrupt and you are seeking clarification on an assessment you have received from your Trustee, we recommend that you speak directly with your Bankruptcy Trustee or Bankruptcy Regulation.

Are you facing bankruptcy but worried how it might affect your spouse? In some cases the finances between spouses become unclear and the bankruptcy of one spouse can make the situation very complicated. The specifics will depend largely on extend on how the financial affairs have been structured between each spouse. It is possible though, that one spouse will be able to survive whilst the other spouse becomes bankrupt. To be a little more specific let’s look at an example. Let’s assume both spouses jointly own an asset like real estate and the house is jointly owned and worth $200,000 but the mortgage on the property is only worth $100,000. In this case the joint equity in the property is $100,000 which means each spouse is entitled to $5,000 each. Therefore the non bankrupt spouse would need to offer $50,000 to the trustee of the bankrupt spouse. If this didn’t occur then the trustee of the bankrupt spouse could apply to court and sell the property.

This is only one example of many which could arise in bankruptcy.

Bankruptcy is complicated and if you have a spouse and you want to understand the implications and consequences it is best that you call us direct and discuss your situation.

If you or your spouse are contemplating bankruptcy and I want to understand how will bankruptcy may affects your spouse, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.

What is a Trust?

A trust is a legal structure which is typically used to split income amongst family members and to protect family assets. That is why many trusts are referred to as “family trusts”.

A trust has several participants including a settlor, a trustee and beneficiaries.

The Settlor is the person who creates and settles the trust for the benefit of the beneficiaries. The Settlor must be a separate person to the Trustee and the beneficiaries.

The Trustee is the person or corporate entity who administers the trust assets for the benefit of the beneficiaries. The Trustee legally owns the trust assets but holds the assets “on trust” for the beneficiaries.

The beneficiaries are natural persons or companies who have been listed to receive income or capital distributions from the trust. While the beneficiaries do not legally own the trust assets, they can hold a “beneficial interest” in the trust assets.

The two most common forms of trust are:

• Discretionary Trust
• Unit Trust

What is a Discretionary Trust?

A discretionary trust is usually used for family situations and is commonly referred to as the family trust. In a discretionary trust, the beneficiaries do not have a fixed entitlement or interest in the trust assets. It is at the complete discretion of the Trustee to calculate and make distributions to the beneficiaries. Whilst the Trustee has complete discretion to calculate and make distributions, the Trustee must only make distributions to the listed beneficiaries.

For example, if a discretionary trust has 5 listed beneficiaries, the Trustee could make an income distribution to 2 of the 5 listed beneficiaries. In practice, that could mean that a husband and wife receive an income distribution, whereas their children, being the other beneficiaries, receive nothing.

What is a Unit Trust?

A unit trust is similar to a company where the unit holder (the beneficiary) holds a fixed amount of units in the trust. When the Trustee makes a distribution to the unit holders, it must be strictly in accordance with the unit holders’ entitlements. For example, if there are 2 unit holders in a unit trust holding an equal amount of units, the Trustee must make a distribution of 50% to each unit holder.

Trusts and Bankruptcy

In the context of bankruptcy, it is critical to establish the type of the trust involved. There are a number of key differences between a discretionary trust and a unit trust in bankruptcy.

Discretionary Trusts and Bankruptcy

If a discretionary trust is in place (more commonly referred to as a family trust) and a listed beneficiary becomes bankrupt, the trustee of the trust has complete discretion whether to “include” or “exclude” the bankrupt beneficiary in any further trust distributions.

The Bankruptcy Trustee (on behalf of the bankrupt beneficiary’s creditors) is entitled to copies of the trust deed and trust accounts. However, the Bankruptcy Trustee cannot demand that the trustee of the trust include the “bankrupt beneficiary” in future trust distributions.

Therefore, a discretionary trust can be a very effective structure to protect family assets from a Bankruptcy Trustee.

A Bankruptcy Trustee is entitled to challenge any transfer of assets into a family trust if they were made with the intention to avoid or defeat creditor claims. If assets are transferred with that intention, the transaction may become void against the Trustee in Bankruptcy under section 121 of the Bankruptcy Act.
In other words, the transfer of assets into the family trust could be “attacked” or “clawed back” by the Bankruptcy Trustee.

Unit Trusts and Bankruptcy

If a unit trust is in place and the listed beneficiary becomes bankrupt, the trustee of the trust does not have any discretion and must pay the bankrupt beneficiary all distributions in accordance with the trust deed. The Bankruptcy Trustee may even be able to force the Trust to be wound up and the trust assets to be distributed to the unit holders.

Restrictions on Advice and Assistance

This area of law is very complicated. This article only provides a basic outline of trusts and their role in bankruptcy. We do not warrant the accuracy of the information on this site. You should seek independent legal advice if you have a family trust and are considering bankruptcy.

If you or your spouse are contemplating bankruptcy and you want to understand how your rights under a family trust may be affected, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.

Lots of people assume that bankruptcy will clear all debts, but unfortunately this is not the case. Some debts like child support payments are not provable in bankruptcy which means if you declare bankruptcy, you will continue to be liable to pay these amounts. In a practical sense, what this means is that if child support makes up a large part of your debts, then bankruptcy may not be your best option. Bankruptcy laws are complicated and you should always speak to a bankruptcy expert who will understand the difference between provable and non-provable debts. Please read our related post on provable debts in bankruptcy.

If you would prefer to talk to an expert about your specific situation, then call the Australian Bankruptcy Service toll free on 1800 462 767. Our toll free telephone line is open 24 hours everyday / 7 days a week.

All calls are free, entirely confidential and if required, anonymous.

Bankruptcy Trustee can sell property

Section 134 of the Bankruptcy Act provides power to a trustee in bankruptcy to sell property of the bankrupt unless the property is protected under the Bankruptcy Act.
The common type of property which a trustee in bankruptcy will sell includes (but is not limited to):

• real estate
• motor vehicle exceeding the value of $9,400
• tools of trade exceeding the value of $4,350
• fine art work or antiques
• shares in companies

Real Estate in Bankruptcy

A trustee in bankruptcy must sell any interest a bankrupt holds in real estate. A trustee in bankruptcy will determine whether a bankrupt has any interest in real estate by conducting a valuation of the property by a registered valuer. If the value of the property exceeds the amount owing under any registered mortgage or any other registered security on the property the trustee in bankruptcy must realise that interest. If the property is owned singly by the bankrupt, then the trustee will most likely sell the property by auction. If the property is owned jointly with the bankrupt’s spouse, then the trustee in bankruptcy will most likely attempt to sell the bankrupt’s interest in the property to the non-bankrupt spouse. If agreement cannot be reached with the non-bankrupt spouse then the trustee in bankruptcy may apply to court for an order to sell the property.

Motor Vehicle in Bankruptcy

If the bankrupt owns a motor vehicle and its value exceeds the statutory threshold (currently $9,400) then the trustee in bankruptcy must sell the vehicle, however, the trustee in bankruptcy must return the protected value to the bankrupt. For example if the motor vehicle is worth $10,000 (same) and the trustee in bankruptcy sells the vehicle then the trustee must return $900 ($10,000 – $9,400).

Tools of Trade in Bankruptcy

If the bankrupt owns tools of trade and the collective value of the tools exceed the statutory threshold (currently $4,350) then the trustee in bankruptcy must sell the tools, however, the trustee in bankruptcy must return the protected value to the bankrupt. For example if the tools are worth $5,000 (SAME) and the trustee in bankruptcy sells the tools then the trustee must return $800 ($5,000-$4,350).

How long will I be bankrupt?

A bankrupt will ordinarily be automatically discharged from bankruptcy after 3 years from filing a statement of affairs with AFSA (Section 149 of the Bankruptcy Act). This principle stands unless the Trustee in Bankruptcy files an objection to discharge in accordance with Section 149B of the Bankruptcy Act.

A Trustee in Bankruptcy may file an objection to automatic discharge and if that objection if accepted by AFSA, the bankruptcy can be extended up to 5 years in total or in extreme cases up to 8 years in total.

Therefore if you have been made bankrupt by a creditors’ petition you must a Statement of Affairs before the standard bankruptcy term of 3 years commences. If you do not file a Statement of Affairs with AFSA you could be bankrupt indefinitely.

Objection to bankruptcy discharge

A Trustee in Bankruptcy can file an objection to discharge if the bankrupt has not complied with their obligations under the Bankruptcy Act.

A bankruptcy term can be extended up to 5 years or 8 years in special circumstances depending on the level of non-compliance.

If you or your spouse are contemplating bankruptcy and you want to understand if a Trustee in Bankruptcy can object to my automatic discharge, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.

Bankruptcy meetings can be called for a variety of reasons and they can be initiated by the Trustee in Bankruptcy or in certain circumstances by the creditors. Creditors holding twenty five percent (25%) of all claims can request the Trustee in Bankruptcy to call a meeting of creditors.The most common reason for a Trustee in Bankruptcy to call a meeting of creditors is to have their fees approved but there are reasons as follows:

• To vote on an annulment proposal;
• To appoint a committee of creditors;
• To inform creditors in person about the administration of the estate;
• To consider a change of Trustee in Bankruptcy to administer the case.

Who is allowed to vote & how are the votes counted?

The Bankruptcy Act has strict rules and regulations as to who is allowed to vote at meetings and how votes are to be counted. These rules are explained below.

Who can vote?

Only creditors who have proved their claim can vote at a meeting of creditors (Sec 64ZA of the Bankruptcy Act). A creditor must prove their claim by completing a Proof of Debt or by completing a Statement of Claim.When deciding if the creditor can vote, the Trustee in Bankruptcy will most likely ask the creditor to provide documentary evidence to support their claim. If the creditor refuses or fails to provide documentary evidence the Trustee in Bankruptcy may reject the claim for voting purposes. If this happens the vote won’t be counted.

Without completing a Proof of Debt or a Statement of Claim the creditor will not be able to vote at the meeting.

How are the votes usually counted?

Creditors are usually allowed to vote for the full face value of their debt, for example – if the face value of the debt is $100, then the creditor will be admitted to vote for $100 (Sec 64ZA(4).

Are the voting rules different for Assigned or Purchased Debts?

However, if the debt has been sold or assigned for less than its face value, then the creditor who has purchased the debt or has been assigned the debt will only be able to vote for the amount that they paid for the debt (Sec 64ZB(8) of the Bankruptcy Act). This rule is to prevent friends or family members of the bankrupt purchasing debts (for less than the face value) and then voting for the full face value of the debt. If the creditor who purchased the debt fails to disclose how much they paid for the debt, then that creditor is not entitled to vote(Sec64ZA(6) of the Bankruptcy Act).

How are resolutions at meetings decided?

Ordinary resolutions are usually passed if the creditors representing at least 50% of the total claims in value vote in favour. However some resolutions under the Bankruptcy Act require a Special Resolution (for example a special resolution is required to pass an annulment proposal). For a Special Resolution to be passed creditors voting in favour must represent at least 75% of the total claims (in value) and at least 50% of the creditors (in number of creditors).

If a meeting of creditors is called am I as a bankrupt obliged to attend?

If the Trustee in Bankruptcy calls a meeting of creditors and issues a notice to the bankrupt to attend under Section 77(1)(b)of the Bankruptcy Act, then the bankrupt is obliged to attend the meeting. If the bankrupt fails to attend then (without a good reason) then the Trustee could file an objection to discharge which could result in the bankruptcy being extended to 8 years (Section 149Dof the Bankruptcy Act).

Virtual meetings in Bankruptcy

A Trustee in Bankruptcy can in some circumstances have resolutions passed by issuing formal notices under the Bankruptcy Act (Sec 64ZBA). These notices are usually used by Trustees in Bankruptcy to save costs as hold physical meetings can be costly. The most common reason to issue a notice of this type is to have fees approved by creditors.

Bankruptcy should be considered as a last resort to deal with unmanageable debt.

The effects of bankruptcy last long after you’ve been discharged and can put severe restrictions on what you can borrow in the future.

Your bankruptcy history will be recorded on commercial credit database for a period of seven (7) years from the date of your bankruptcy and therefore if you apply for finance in the years following discharge you will need to prove yourself to potential lenders as a worthy applicant for finance.

This can be done by opening new accounts and paying all bills on time. Over time this will help establish a new credit history.

However, if you have been bankrupt in the last 7 years, please be aware that lenders will complete a credit check before approving any loan and as such your bankruptcy status will be known. For that reason we stress to people that they need to carefully complete finance applications and truthfully disclose any bankruptcy history. Even if it was more than 7 years ago it is best to fully disclose your bankruptcy history and the financier can assess the relevance of it.

Unfortunately, we have observed that even when you have been discharged from bankruptcy, there will still be some organisations that decline your finance application or refuse to lend you money based on your bankruptcy history.
Whilst it will definitely be more difficult to borrow money after bankruptcy, we encourage our clients to remain positive and work hard towards building a new credit.

If you or your spouse are contemplating bankruptcy and you want to understand if you can borrow after bankruptcy, then call the Australian Bankruptcy Service today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.