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