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