Many people are confused about the costs associated with going bankrupt. Here at the Australian Bankruptcy Service we have had people tell us that they cannot afford to go bankrupt, but on the other hand, express surprise when there is a cost involved. In actual fact, you have two choices when it comes to declaring bankruptcy, and based on that choice you will either pay a fee, or nothing at all for your bankruptcy administration.
It is important to note first that when we talk about the cost of your bankruptcy administration, we are referring to fees for the service. This is separate to any payments from your income you may be bound to contribute to your bankrupt estate, which will depend on how much you earn, and would be applicable regardless of how you chose to have your bankruptcy administered. If you have any assets of value when you go bankrupt they would need to be investigated by your Trustee and possibly sold, and again, this would happen regardless of who your Trustee is.
This matter of who your Trustee is determines the cost of your bankruptcy administration. In Australia you have two choices when declaring bankruptcy: you can appoint the “Official Trustee”, which is a government body known as Australian Financial Security Authority (AFSA), or you can appoint a private Registered Trustee of your choosing. If you decide to have AFSA act as your Trustee, providing you do not have to contribute any of your income or assets as mentioned above, you will not have to pay anything toward your bankruptcy.
If you would rather have a private Registered Trustee that you have chosen, you will need to pay for their service. A Registered Trustee is usually either a fully qualified Chartered Accountant or Certified Practicing Accountant, and has to go through a rigorous acceptance process to be registered with AFSA. Registered Trustees are individuals who are working for, or running, a business, and as such they need to be remunerated. The cost of appointing a Registered Trustee will vary from place to place – as an example, our price starts at $80 per week (on a voluntary basis), which is one of the lowest prices you will find. People generally choose a private Trustee over the Official Trustee when they feel that they would be better off with a more personal service. Remember, the Official Trustee is not a person – it is a government body.
Some businesses also offer the service for filling out your bankruptcy application for you, which is lodged with AFSA, who then become your Trustee. When choosing this service, it is important to find out who your Trustee will be – sometimes the impression can be given that it is the company you are dealing with who will act for you. We have heard of people who have paid thousands of dollars just to have their paperwork filled out and the Official Trustee appointed to them, which is too much. You could actually complete the paperwork yourself! But if you do want the assistance of a professional to ensure it is done properly, we can help you for a one-off fee of $800.
If you are looking for an indication as to what bankruptcy will cost you, call our bankruptcy team today on 1800 462 767 for obligation-free advice.