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: www.bankruptcy-australia.net.au

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 website:bankruptcy-australia.net.au

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 website:bankruptcy-australia.net.au

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.

Bankruptcy

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 website:bankruptcy-australia.net.au

Bankruptcy in Australia - Will my income be changed if I go bankrupt?

Bankruptcy Australia is a challenging process, and you should ensure you get the right advice. And when it comes to your income being affected, the answer to the question is maybe. The first thing you need to know about going bankrupt is there is no regulation on how much you can earn. However, I will mention that your income is a serious consideration when working through when it comes to Bankruptcy.

The first thing you need to understand about this area of Bankruptcy is the amount you can earn before you start paying back money to your creditors via your trustee (see table below).

Net income is the pre-tax/ in the hand sum you earn annually. A dependant is someone who lives with you and earns less than $3,124 per year (regardless of their age).

You can request a hardship variation that raises the threshold amount, if you have financial commitments in Australia like medical, child care, significant travel to and from work, or a circumstance where your spouse used to work but is no longer able to add to the family income.

Some of the useful parts of Bankruptcy is that your employer will not be notified when you file for bankruptcy. Also, Child support is always considered in bankruptcy, if you receive child support that is not factored in as income. If you pay child support this will be also considered, for example if you provide $5,000 child support each year and you have no dependents living with you then your revised net income limit will be $55,332.10.

There are more issues involving income and what is or isn't thought of as income - if you're not exactly sure, it's best to get professional advice. The reason you have to consider your income as a part of the Big 5 questions here is that bankruptcy is in some situations not an economically viable option.

If one of your creditors is the ATO (for unpaid taxes), then your tax refund can be taken by the ATO while you are bankrupt to contribute toward your tax bill. If you don't have a tax bill then you will keep your tax refund so long as that doesn't take you over your threshold income restrictions.

If you believe that when it comes to Bankruptcy, your case is more complicated, then feel free to get professional advice in Australia. I may seem like a broken record, but keep in mind that it's always a smart idea to overcome these options prior to declaring bankruptcy, because once you have filed the paperwork it's too late to change your mind.

If you want to find out more about what to do, where to turn and what problems to ask about Bankruptcy, then feel free to contact Bankruptcy Australia on 1300 795 575, or check out our website: bankruptcy-australia.net.au

Bankruptcy in Australia - Are you going to get bitten?

When people in Australia ask me about Bankruptcy, I let them know the time-honored Native American Fable of the little boy and the Rattlesnake. An old rattlesnake asks a passing young boy to carry him to the mountain top to discover one last sunset before he dies. The boy was hesitant, but the rattlesnake promised not to bite him in exchange for the ride. They journeyed together only for the snake to in the end bite the boy despite his promise not to do so. The snake's response was 'You knew what I was when you picked me up.'

Receiving the right financial advice in Australia when it comes to Bankruptcy is a lot like that little boy's experience, tangled up with risk and danger, and usually skewed for the benefit of the person presenting the advice. In many cases you'll get bitten except if you know what you've picked up before you move forward (avoid the rattlesnakes). I learned the problem with obtaining financial advice as a teenager, and it has been necessary to Bankruptcy. I'd been working hard for a few years, and saved up a small amount of money I wanted to invest. It was the early 1980s so interest rates were pretty high and investing your money was very profitable. I spent some time researching varying investment options, and I went to visit a few financial advisors. It was transparent that they had more money than I did: they had good suits and plush offices, they all appeared to exude confidence and have all the solutions. What struck me was that they all had a truly different idea of what I should do. This confused me so much that it put me off the entire idea of picking any of them.

I'm sure currently you have read more than enough on the internet to be totally bewildered about Bankruptcy and precisely what to do. It would most likely be easier for me to help you comprehend the nature of the financial snakes you might be picking up while you are attempting to get to the bottom of your financial problems in Australia. In essence, you have to try and recognize what your overarching options are, do your very own research into where to proceed with your plan for Bankruptcy, and then approach what you feel is best in Australia for your needs. Basically, you have 3 options for who to turn to.

The first option is a Solicitor- This may seem the go-to option when you appear to be in trouble. But there really is only so much assistance they can give on this matter. There are certainly specialist legal advisors in bankruptcy, but their experience features a hefty price.

Another possibility you may think of is your accountant- they are incredibly helpful and vital to the process of operating your business, but for the most part, when you are considering Bankruptcy, your accountant won't be much help to you any more.

Your best choice? A Financial Counsellor that can outline debt consolidation, personal insolvency agreements, and pretty much all you have to figure out when it comes to Bankruptcy.

If you wish to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to speak to Bankruptcy Australia on 1300 795 575, or visit our website: bankruptcy-australia.net.au

Bankruptcy in Australia - Changes that can help Small Business and Entrepreneurs

Do you have knowledge of how much BankruptcyAustralia is changing? The Australian Government in late 2015 urged some progressive changes to the Bankruptcy Laws in Australia. The most significant of these is the length of time that a person is bankrupt for. Currently, there is a minimum amount of time that you must continue to be bankrupt, having said that, this 3 year period may in fact be reduced to just 12 months. So if you are inquiring about Bankruptcy, this news may be somewhat important to you.

Mark Carnegie in the Financial Review on the 7th December 2015 suggested that "the proposed changes to ease the burden of bankruptcy laws didn't go far enough and the government should adopt US-style laws to protect the family home".

These updates to the issue of Bankruptcy will take 18 months to implement. Mr Carnegie, went on to say in the Financial Review that giving protection to family assets was important because "banks just terrorise small business and the mental health consequences to society are enormous".

The problem is Australia's bankruptcy laws put off investors from supporting start-ups, and as a result mentoring had been "driven out of the system".

"They naturally find it very intimidating themselves personally and with their assets at risk in a risky early-stage deal, but with their own money in the deal and a lightened-up provision I think we 'd probably see more willingness. It could be more important than the money."

Fraudulent Behavior

The controversy surrounding this Bankruptcy issue in Australia that some come up with is that this variation will only invite fraudulent behavior opening pandora's box so to speak for the unscrupulous to misuse of the bankruptcy system. We have looked at the minimum, but on the other side of the matter, The government is not recommending to change the maximum term of 8 years if it deems a bankrupt has appeared in an unethical or fraudulent way, and there are no propositions to change the penalties of misrepresenting yourself or financial situation when filing for bankruptcy in Australia.

As a bankruptcy professional in Australia, I have a fair share of practical experience when it concerns Bankruptcy. And having dealt with countless bankruptcy cases in Australia I have never come across someone abusing the system or acting in a careless way as to exploit the insolvency laws in Australia. When it comes to Bankruptcy, each week I help a small business owner or entrepreneur undergo the very formidable task of bankruptcy, not once have I noticed they are happy about it. The average small business owner or entrepreneur in Australia does not start out taking enormous financial risks with the intent to fail. The media loves citing the apparent abuse that will be rampant if these changes occur, what a joke!

A Win for Small Business

These recommended changes will be good for often the most effective and brightest in Australia not get tossed out of the game financially for financial decisions often outside of their control. Most small business owners I help with Bankruptcy, are hardworking, tax paying, managers keeping this country going.

There really is a fine line with what exactly the government is trying to do here, because they are aiming to balance helping individuals who have made decisions out of their control, and deterring people from making blunders that land them in trouble and consequently an issue of Bankruptcy. However you also don't want to kill the experience and knowledge that business owners have. You undoubtedly don't want to shatter people simply because they have had an honest failure in a large or small start-up project that has not panned out.

At the major end of town large organized companies have long been criticised for their failure to innovate - lets face it they would be more likely to do so if the risks of bankruptcy were lessened because directors are worried they'll be personally accountable in an insolvency arrangement if the new endeavor doesn't work out.

The government's proposed 'safe haven' modifications for directors of companies will allow Australia to more fully explore and innovate, which will make big changes for Bankruptcy. I cannot imagine, that these developments will be harmful to Australia's economy, actually these bankruptcy laws will save the tax payer in all areas of health - Especially in the mental health industry because the emotional cost of bankruptcy is enormous. When it comes to Bankruptcy in Australia not a day passes where I don't hear the tragic stories of relationship failures, thoughts of suicide and the list continues.

Bankruptcy helps save lives, and it could save yours. If you are in need of some assistance with your debts in Australia or are just thinking about Bankruptcy, don't hesitate to give us a call here at Bankruptcy Australia on 1300 795 575, or visit our website: bankruptcy-australia.net.au