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