Monday, August 7, 2017

Bankruptcy Australia, What is the Deal with Debts?

So what Debts are eliminated if I go Bankrupt?

The basic answer is that when it concerns Bankruptcy most debts are wiped, and I have added a summary below for you to look at.

But, put simply some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) and even any debts arising from uninsured Motor-vehicle claims and educational debts for instance, HECS or FEE-HELP. These debts are not wiped out when you file for bankruptcy.

What about Secured Debts?

A secured debt is a car loan or a home loan; it is a debt that has some definite security affixed to it. So for example if you buy a new car for $40,000 dollars the security for this car is the actual car itself.

So, can my secured debts be removed if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt eliminated if you simply return the car. So the lesson is that you cannot have your cake and eat it too (so to speak), so yes all of your secured debts might be wiped but the asset has to be sold or returned. This is just one aspect that, when it comes to Bankruptcy, it is vital to get professional advice - like that offered at Bankruptcy Australia.

What about my Tax Debts with the ATO can they be cleared away If I go bankrupt?

Yes they can, both business and personal debts owing to the ATO can be cleared away with bankruptcy. If you have a business with any sort of debts receive some advice because it is not always so self-explanatory. Feel free to call us right here at Bankruptcy Australia if you have any type of questions on 1300 795 575. Or feel free to go to our website:

What about my business or Company debts?

Sometimes when it concerns Bankruptcy we can help you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Normally you may need to liquidate a company to deal with the debt this way. And when it comes to Bankruptcy, it can be a confusing area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Australia we specialise in business and personal debts so call us here at Bankruptcy Australia if you have any questions regarding Bankruptcy on 1300 795 575. Or feel free to explore our website:

Monday, May 22, 2017

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be involved and confusing. A question we often get asked here over at Bankruptcy Australia is 'what happens to my super if I apply for Bankruptcy'? The reply for most is easy, if your super is normally in a regulated fund or industry fund like Sunsuper or Host Plus then virtually nothing happens; your super is 100 % safe when it comes down to Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, take into account the increasing number of members of Self-Managed Super Funds ("SMSFs") lately; the ATO tells us it has increased Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it concerns Bankruptcy?

Remember Bankruptcy Australia is not indicating this article is the complete story, if you have any questions feel free to contact us on 1300 795 575. No matter if you call us or another person it does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we strongly recommend you obtain both legal and financial advice before proceeding with any of the actions suggested in this article.

What is a Disqualified Person?

First and foremost, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Because if you are going up against bankruptcy, you will be classified as a 'disqualified person'. And a disqualified person cannot operate as an Individual Trustee. This poses a problem due to the fact that usually most of the SMSFs are just 2 people, which means both of these members have to also be the individual trustees. The position of trustee sets a lot of legal rules, and if you are in this position I would highly recommend you to end up being familiar with them all-- including the fact that you can not 'know or suspect' that one of you are bankrupt. So you can see how an individual bankruptcy can be very damaging to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How much time do I have to restructure my SMSF Fund after I'm bankrupt?

So what happens if one of the members of an SMSF does enter Bankruptcy?
For starters, the SMSF will need to be restructured. This means that you will want to consider your extensive structure and ensure that it is meeting the basic conditions, including having a new trustee that is not experiencing issues with Bankruptcy. The Australian Tax office will offer you a 6 month 'grace period' to get this done before you face penalties. And keep in mind, sometimes the best plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale restructuring issues, there is a lot of paperwork to deal with too, and you need to be constantly keeping the ATO informed of what is happening. This indicates you need to let them know that you have a bankruptcy problem with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also have to inform the ATO using the form NAT 3036 (Found on the ATO website) and they must also notify ASIC of their resignation.

During that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are uncertain call Bankruptcy Australia for some free advice on 1300 795 575.

What if I have a single member fund?

If you are a single member fund, then you will have to appoint a new director, and it will then end up being their obligation to oversee the sale and relocation of assets into a managed fund. If there are two or more members, than the bankrupt member will need to resign and the other member will clear away the property and halve the proceeds. They would then have to decide if they want to remain as a single member SMSF, or if they need to roll it all into a managed fund. If both members are entering bankruptcy, then they would need to sell all assets immediately and transfer the liquid assets to the managed fund.

From that you can notice how when it comes to Bankruptcy, even when one single member is facing issues, it can affect the very existence of an SMSF. If you are already facing this concern yourself, or with a partner in a SMSF, please seek financial advice to make sure you are satisfying the ATO requirements.

A simple solution ...

As I proposed earlier, a basic solution to your SMSF situation is to put your super back into a normal regulated managed fund prior to bankruptcy and save yourself all the problems outlined above. Bankruptcy is never easy, but finding proper advice is the best first step. If you want to discuss your options further, give us a call at Bankruptcy Australia or visit our website: or just give us a call on 1300 795 575.

Wednesday, January 11, 2017

Bankruptcy in Australia - Will I lose my house if I go bankrupt?

Bankruptcy Australia is a challenging process, but I know from meeting with thousands facing the prospect of bankruptcy over the years, that very little troubles people more than the notion of losing the family house. Almost every person is on an emotional level connected to their home - it's where the kids have grown, it's where you appreciate life on a day to day basis.

Will you lose your home if you go bankrupt? The response is a resounding maybe. (not very useful, I know) People typically feel that it's an inevitable consequence and a part of Bankruptcy, and consequently push themselves to the brink of insanity to not lose the family home. But when it comes to the whole process of Bankruptcy, a key perk of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you've accepted to pay back the debt you are in.

So how is it possible to keep my Australia house, you ask? It's easier if I explain the basic guideline behind the Bankruptcy process as administered by the trustee, then you'll have a more clear picture.

The function of the bankruptcy trustee is to firstly abide by the regulation of the bankruptcy act 1966 (it's a very dry read about 600 pages if you are eager).

Within that regulatory framework, the trustee is to help recover monies owed to your creditors, that is carried out in a bunch of distinct ways but it mainly comes down to income and assets. The trustees role is to collect payments beyond your income threshold. The further role is to sell off any assets that can contribute to paying back your debts.

What this resembles is that yes the trustee will sell your house right? Not normally. The only reason the trustee will sell off any asset including your house is to get money to repay your debts. If there is no equity in your home then it's pointless to sell your home. This is happening increasingly since the GFC as house prices in many areas have been heading south so what you paid 4 years ago may not necessarily reflect the price today.

A quick word of advice here if you have a house in Australia and are looking at Bankruptcy: get a skilled professional to help you through this process, there are lots of variables in these scenarios that should be considered.

You might wonder, why would the bank want bankrupt clients? wouldn't they need to sell your house and not take the risk? The bank that has nicely lent you the money for your house is making good money every month in interest out of you, month in month out, provided that you keep up to date with your repayments then the bank really wants you in there at all costs. Ultimately however it's not the bank's call if the trustee establishes that there is plenty of equity in your house the trustee will force you and the bank to sell the house.

When you file for bankruptcy you are asked to make a note of the value of your house and the quantity you owe on the house. A tip if you are attempting to work out the value of your house: use a registered valuer as this will provide you peace of mind, don't use your neighbours' gut feel advice or a real estate agents advice to arrive at this figure. When you get a valuer out to your home, make sure you tell the valuer to value the property for a quick sale, make sure you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to give two valuations: one for a quick sale and one for a well marketed non time delicate sale. Nowadays that's not the case, but if you meet them and let them know you need to sell your home in the next 30 days you may control the result. The idea is that you want a life-like sell now figure.

There are two main reasons this valuation system is critical to you: one you may have peace of mind ascertaining the market value of your house, and after that you can easily set up your equity position. Secondly, your home may be really worth a lot more than you thought. Get some tips before carrying this out. The number of times I've met with clients that have sold their family home of 20 years simply to discover I could of helped them keep it; unfortunately this happens all too often

When it concerns Bankruptcy and houses, another serious consideration is ownership, often houses are purchased in joint names. In other words a couple may be a house 50/50 using both incomes to make the payments. If one party declares bankruptcy and the other party does not, the equity is only factored on the 50 % of the property.

When it comes down to Bankruptcy, this is just one of potentially numerous scenarios that are likely when it comes down to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's portion of the home in bankruptcy also. I should repeat this but get some guidance on this area of Bankruptcy because it is very tricky and every case is different.

If you need to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to contact Bankruptcy Australia on 1300 795 575, or visit our website:

Wednesday, November 16, 2016

Bankruptcy in Australia - Who exactly do I talk to?

Should I speak with my accountant about Bankruptcy?
The answer seems clear doesn't it: if anyone knows your financial circumstance well in Australia, It's going to be your accountant. However, the short answer is a resounding No! It's not that your accountant does not have your best interests at heart when it comes to Bankruptcy, it's that his expertise lie in helping you save you money at tax time, reducing your tax liability and lodging your BAS.

Most accounting degrees will put in very little to no time on bankruptcy, it's generally done as a post graduate specialty program for those who want to work in the field. Unless your accountant is an insolvency expert, he would not know that a lot about the effects of Bankruptcy, I can assure you insolvency specialists know much about tax returns or BAS in. If you do manage to find an insolvency accounting firm in Australia, they tend to be large firms with very nice offices who charge accordingly.

Should I talk with my Solicitor about Bankruptcy?
No! You can speak to your solicitor in Australia but more than likely it won't do you much good. Solicitors are definitely good at undertaking things lawyers do, like helping you do your Will and buying your house and trying to keep you out of court if you're lucky. When it comes to Bankruptcy, the specialists in Australia usually have either a legal or accounting qualifications, and the reason for that is simply that you can't enrol in the post graduate study to become a qualified insolvency practitioner except if you have a law or accounting degree.

Just as there are a handful of insolvency accounting firms, there are very few insolvency legal practices in Australia, and yes if you locate one you will pay a sizable price for their expertise.

Should I talk to a financial counsellor about Bankruptcy?
Yes! There are lots of financial counselling services to aid you through this, they have no hidden agendas and they're a fabulous option for helping you think through your situation when it comes to Bankruptcy. If you find yourself freaking out constantly, not sleeping, not eating or over-eating and thinking about money pressures all the time, then get some help.
There are also charitable organizations around Australia like Lifeline that offer a remarkable service. They will be a sounding board if you just need somebody to review with you what your choices are. Don't let your financial problem destroy your life - in the end it's just money.

If you like to learn more about what to do, where to turn and what matters to ask about Bankruptcy, then feel free to speak to Bankruptcy Australia on 1300 795 575, or visit our website:

Monday, August 8, 2016

Bankruptcy in Australia - Will I lose my business if I go bankrupt?

When people in Australia come to me looking to talk about Bankruptcy, they are usually full of questions. The internet has plenty of information, but far too much of it is baffling or contradicts itself, so I make it my mission to try and make it clearer. One of the most typical troubles is 'Will I lose my business if I declare bankruptcy?' The short answer is no. If you are an owner of a business any shape or size you can maintain your business if you wish to. In Australia, businesses that eventually are insolvent have a few options such as liquidation, voluntary administration and so on. It's people who go bankrupt not businesses.

Bankruptcy is a complex area so get some expert advice on this if you have a business. Generally speaking, the financial obligations in a business and personal debts go hand in hand when a business owner declares bankruptcy. There are some important implications for directors of companies when it pertains to Bankruptcy in Australia: A bankrupt can not be a director of a company, so if you have a pty ltd company you will likely need to resign as a director soon after you're bankrupt.

A constraint that applies when you are bankrupt as a business owner is that you can be in your own business as a sole trader only. Certainly there are things you must reveal as a part of that but in a nutshell you can still run your business. For some business owners, bankruptcy affects their ability to run the business because of the licensing issues. For example, if you run a building company, your license will be suspended once you're bankrupt and consequently you can not trade without that license, so make sure you are asking the appropriate questions when it concerns licenses and Bankruptcy in Australia.

But if your business is not impacted directly by such issues, then you'll have to restructure the way you run your business. There are considerations when and if you go bankrupt as a business owner: you can not rack up heaps of debt in your company, then go bankrupt then open the doors the next day like absolutely nothing had happened. There are laws in place to prevent what is called phoenix companies appearing out of the ashes of an old business.
Having said that, it's just an issue of talking with the correct people about Bankruptcy. In this situation you may think you need a liquidator for your company, and you might be right, but bear in mind that every liquidator is different and have their own motives. Liquidators profit from your liquidation - heaps of money - so what advice do you believe you will get?

When it comes to Bankruptcy, I consider that giving generic advice in this area is essentially damaging as it can have very serious implications for directors and business owners. This is because it is one of those cases where what the right guidance for one business owner is the wrong advice for the other. There are some principles however, that you may benefit from. There is no reduce to the size of the business you run when you are bankrupt. You can employ staff. You can continue to deal with your distributors under certain conditions, the main one being you will need to meet the payment terms agreed upon.

So when it comes to Bankruptcy, don't get extremely confused about what you can and can't do as a business owner, just get the best advice ... If you want to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to call Bankruptcy Australia on 1300 795 575, or visit our

Friday, August 5, 2016

Bankruptcy in Australia - Choices, Choice, Choices

When it comes down to Bankruptcy Australia, there are a load of choices that we get given depending upon who we are, who we speak with, and just what has gone wrong. One of the most common confusion I see with Bankruptcy is when it comes to choosing between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.

Should I consolidate my debts?

When it comes to Bankruptcy in Australia, most of the information you receive on this issue will reflect the interests of the advice giver. That is why, if you call a debt consolidation provider, I can guarantee you they will tell you to consolidate your debts. The debt consolidation industry is a multi-billion dollar industry making money in one very basic way: charging you a fee for assisting you wrap every one of your credit card and personal loans into just one neat and tidy package.

I hate to tell you this but these guys won't be doing it free of charge. Please don't misunderstand me: if you consider your financial issues in Australia can be solved by paying less interest, then go on and consider the options. Even a small amount of interest saved over years rapidly adds up.

Normally I find if you are reading this blog you've undoubtedly attempted to consolidate your debts already and come to the following realisations like these:

  • Your credit rating is not good, and your credit file already has defaults on it so not a single person will offer you a loan, consolidated or otherwise,.
  • By the time you work it all out, you're so far down a hole that saving a small amount of interest simply won't make a great deal of difference,.
  • - You've likely arrived at the point where you've had more than enough, you're mentally drained, you can't go on yet another day ignoring blocked calls on your phone, ignoring the demands in the mail etc.

Personal Insolvency Agreements

So when it concerns Bankruptcy in Australia, what's the huge difference between a Debt Agreement and a Personal Insolvency Agreement?

Freedom is the main point Personal Insolvency Agreements (PIA) have in their favour. They're also administered by a registered and - may I add - regulated trustee featuring the government trustee ITSA, and not a private company that advertises on TV. Essentially this process is similar to Debt Agreements (DA): The trustee holds a meeting with the people you owe money to and they arrange a deal in your place. You can offer a lump sum settlement figure or enter into a payment plan, or perhaps you can offer them assets instead of cash. This may sound alright when it comes to the troubles with Bankruptcy - that is up until you realize that one of the obstacles with PIA's is that 75 % of the people you owe money to will have to agree on the deal. If they don't, your plan is rejected or has to be renegotiated.

Generally the people you owe money really want all their money back in addition to interest. Sometimes they'll opt for under the amount you owe them - it's typically a percentage of the debt - but allow me to stress this part: because of all the variables involved in the negotiation process to put together a PIA its difficult to put a figure on what the people you owe money to will truly settle for.

In most cases you'll have to pay back 100 % of the debt owed. This is not just because your creditors are greedy or have a mean streak, it's because the administrators take 20 % of whatever is decideded upon with the people you owe money to. That applies whether you use a private company for this process or ITSA, the government body setup to administer to these PIAs.

When it comes to Bankruptcy and insolvency I've heard of creditors opting for less 80 % on rare occasions, but that usually only occurs with a public company entering into receivership owing huge sums of money (the kind that makes the news). If you are were owed $10million and you know the people who owe you the money have a team of clever lawyers and some very clever frameworks in place and they offer 5 % of the debt, you might take it and be grateful. Sadly, ordinary punters like you and me in Australia aren't going to get that lucky!

If you wish to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to get in touch with Bankruptcy Australia on 1300 795 575, or visit our

Sunday, July 3, 2016

Bankruptcy in Australia - does it matter if it is voluntary?

When it comes to Bankruptcy Australia, normally people aren't aware that there may be both voluntary, and involuntary bankruptcy - each have different approaches and rules.

Involuntary bankruptcy takes place when somebody you owe money to applies to the court to declare you bankrupt. Usually when you get one of these types of notices, you have actually 21 days to pay all the debt. If you do not, then the creditor returns to the court and requests the court to provide a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the documentation in and after that you are bankrupt.

You can object to a bankruptcy notice by going to court immediately after the 21 days have expired and put your case forward, to prevent it going to the next level. Other than the way you became bankrupt there is in reality no distinction between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're overseen to in the very same way.

However, when it comes to Bankruptcy for this, the stress, torment and fear that accompanies this method is incredible. If you think you are in all likelihood to be made bankrupt by someone, get some help and act on that advice. Generally I've found it's always much better to know what you can and can't do before you have an individual bankrupt you. Once you are bankrupt, it's usually too late.

Voluntary Bankruptcy

However, when it comes to Bankruptcy, sometimes there are times that it is the most ideal option. So you may need to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the very same for everybody of course, but ordinarily I find that one way you could work it out is to figure out just how long it will take you to pay each of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may assist you make that decision, and help you to understand Bankruptcy.

Once, I had an 80 year old pensioner, who came to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the level she was paying off her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can really help you think this through. If you move house and forget to pay your $30 phone bill for 6 months more, it's very likely the phone service will default your credit file. That default will sit on your file for 5 years, so for $30 you can have your credit file very seriously damaged for that period of time - and all of this will impact how you need to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is unjustifiable. The punishment doesn't seem to amount to the crime in my book. So if you actually have defaults on your credit report for 5 years, bear in mind that bankruptcy is on your credit file for a total 7 years then its rubbed out completely.

So if your credit rating is a big issue in trying to decide whether to participate in a Debt Agreement or Personal Insolvency Agreement or Bankruptcy remember they will all sit on your credit file for a total of 7 years. The biggest change is that with a DA or PIA you repay the money and nevertheless have it on your file for 7 years.


I have stated the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the element most people are afraid of when they come to me to discuss their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this country the arrangements are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all finished with no strings attached. Compared with countries like the United States, our bankruptcy laws are quite reasonable.

I don't pretend to know why that is but a couple of hundred years ago debtors went to prison. These days I suppose the government feels the sooner it can get you back on your feet working and paying tax, the better. It makes more sense than locking you up which in turn costs the taxpayer anyway.

Bankruptcy wipes all your debts including ATO debts with the exception of a few things:

·         Centrelink Debts, Court Fines like parking and speeding fines.
·         HECS or Fee Help loans.
·         Money to take care of a car accident if the car was not insured.

There is much more that can be said about this and Bankruptcy in general but the purpose of this blog was to help you decide between a few available options. When getting some advice, keep in mind that there are always options when it involves Bankruptcy in Australia, so do some research, and Good luck!

If you would like to find out more about just what to do, where to turn and what questions to ask about Bankruptcy, then feel free to reach out to Bankruptcy Australia on 1300 795 575, or visit our