Bankruptcy in Australia - Who exactly do I talk to?

Should I talk to my accountant about Bankruptcy?

The answer seems obvious doesn't it: if anyone knows your financial situation well in Australia, It's going to be your accountant. However, the short answer is a definite No! It's not that your accountant will not have your best interests in mind when it comes to Bankruptcy, it's that his proficiency lie in helping you save you money at tax time, lowering your tax liability and lodging your BAS.

Most accounting degrees will spend very little to no time on bankruptcy, it's generally carried out as a post graduate speciality program for those who want to work in the field. Unless your accountant is an insolvency expert, he will not know that a lot about the implications of Bankruptcy, I can assure you insolvency specialists know much about tax returns or BAS in. If you do happen to find an insolvency accounting firm in Australia, they often 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 relates to Bankruptcy, the specialists in Australia usually have either a legal or accounting background, and the reason for that is simply that you can't start in the post graduate study to become a qualified insolvency practitioner unless you have a law or accounting degree.

Just like there are a couple of insolvency accounting firms, there are very few insolvency legal practices in Australia, and yes if you choose one you will pay a hefty price for their expertise.

Should I speak to a financial counsellor about Bankruptcy?

Yes! There are plenty of financial counselling services to aid you through this, they have no hidden agendas and they're an amazing option for letting you think through your situation when it comes to Bankruptcy. If you end up freaking out constantly, not sleeping, not eating or over-eating and thinking about money pressures continuously, then get some help.

There are also charitable organizations around Australia like Lifeline that offer a fantastic service. They will be a sounding board if you just need a person to talk about with you what your options are. Don't let your financial problem destroy your life - ultimately it's just money.

If you wish to learn more about what to do, where to turn and what issues to ask about Bankruptcy, then feel free to contact Bankruptcy Experts Australia on 1300 795 575, or visit our website: www.bankruptcyexpertsAustralia.com.au.

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

When people in Australia come to me wanting to speak about Bankruptcy, they are always full of questions. The internet is full of information, but far too much of it is confusing or contradicts itself, so I make it my mission to try and make things clearer. One of the very most natural worries is 'Will I lose my business if I declare bankruptcy?' The concise 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 end up being insolvent have a few options for example, liquidation, voluntary administration and so on. It's individuals who go bankrupt not companies.

Bankruptcy is a complicated area so get some professional advice on this if you have a business. Generally speaking, the financial obligations in a business and personal debts go together when a business owner declares bankruptcy. There are some necessary 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 definitely need to resign as a director as soon as you're bankrupt.

A restriction that applies when you are actually bankrupt as a business owner is that you may be in your own business as a sole trader only. Generally there are things you have to disclose as an aspect of that but basically you can still run your company. For some business owners, bankruptcy impacts their ability to run the business because of the licensing issues. As an example, if you run a building company, your license will be suspended once you're bankrupt and therefore you can no longer trade without that license, so make sure you are asking the right questions when it comes to 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 acquire heaps of debt in your business, then go bankrupt then open the doors the next day like not a thing had happened. There are laws in place to stop what is called phoenix companies appearing out of the ashes of an old company.

Having said that, it's just a matter of talking with the best people about Bankruptcy. In this situation you may believe you need a liquidator for your business, and you could be right, but remember that every liquidator is distinct and have their own motives. Liquidators earn money from your liquidation - heaps of money - so exactly what advice do you believe you will get?

When it comes to Bankruptcy, I believe that giving generic advice in this area is likely harmful as it can have very considerable implications for directors and business owners. This is because it is one of those cases where what the right advice for one business owner is the wrong advice for the other. There are some fundamentals however, that you may benefit from. There is no limit to the size of the business you run when you are bankrupt. You can employ staff. You can constantly 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 too upset about what you can and can't do as a business owner, just get the appropriate advice ... If you want to learn more about what to do, precisely where to turn and what questions to ask about Bankruptcy, then feel free to speak with Bankruptcy Experts Australia on 1300 795 575, or visit our website: www.bankruptcyexpertsAustralia.com.au.

Bankruptcy in Australia - Choices, Choice, Choices

When it comes to Bankruptcy Australia, there are a bunch of options that we get given depending on who we are, who we approach, and just what has happened. One of the most common confusion I see with Bankruptcy is when it comes to selecting between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.

Should I consolidate my debts?

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

I hate to tell you this but they aren't doing it for free. Please do not misunderstand me: if you think your financial troubles in Australia might be solved by paying less interest, then go ahead and consider the choices. Even a little amount of interest saved over years quickly adds up.

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

• Your credit rating is not good, and your credit file already has nonpayments on it so not a single person will give you a loan, consolidated or otherwise,.

• By the time you work it all out, you're so far down a hole that saving a bit of interest simply won't make a great deal of difference,.

• You've undoubtedly reached the stage where you've had enough, you're emotionally drained, you can't go on one more day ignoring blocked calls on your phone, ignoring the demands in the mail and so forth.

Personal Insolvency Agreements

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

Overall flexibility 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 including the government trustee ITSA, and not a private company that advertises on TV. Essentially this method is similar to Debt Agreements (DA): The trustee holds a meeting with the people you owe money to and these experts mediate a deal on your behalf. You can give a lump sum settlement figure or enter into a payment plan, or maybe you can offer them assets as an alternative to cash. This can sound acceptable when it comes to the problems with Bankruptcy-- that is until you discover that one of the problems with PIA's is that 75 % of the people you owe money to must agree on the deal. If they don't, your plan is rejected or ought to be renegotiated.

Generally the people you owe money want all their money back in addition to interest. Sometimes they'll opt for beneath the amount you owe them - it's normally a percentage of the debt-- but let me stress this aspect: 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.

Most of the time you'll have to pay back 100 % of the debt owed. This is not 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 come across creditors settling 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 wise 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 would like 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 Experts Australia on 1300 795 575, or visit our website:bankruptcyexpertsAustralia.com.au.

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

When it comes to Bankruptcy Australia, commonly people aren't aware that there may be both voluntary, and involuntary bankruptcy - each have distinct methods and policies.

Involuntary bankruptcy happens when a person you owe money to involves the court to declare you bankrupt. Commonly when you get one of these notices, you have 21 days to pay all the debt. If you do not, then the creditor returns to the court and asks the court to issue a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the paperwork in and afterwards you are bankrupt.

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

However, when it concerns Bankruptcy for this, the stress and anxiety, torment and fear that accompanies this process is incredible. If you think you are likely to be made bankrupt by someone, get some suggestions and act on that advice. Generally I've found it's always far better to know what you can and can't do before you have a person bankrupt you. Once you are bankrupt, it's usually too late.

Voluntary Bankruptcy

Nevertheless, when it comes to Bankruptcy, sometimes there are times that it is the best option. So you may want to ask yourself, 'when should I consider voluntary Bankruptcy?'.

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

Once, I had an 80 year old pensioner, who spoke 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 her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can help you think this through. If you move house and overlook 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 remain on your file for 5 years, so for $30 you can have your credit file truly damaged for that period of time - and all of this will impact how you have to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is unjust. The punishment doesn't seem to equal the crime in my book. So if you currently 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 detail in trying to decide whether to enter into 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 difference is that with a DA or PIA you pay back the money and still 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 part more people are afraid of when they come to me to go over their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this specific 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 to countries like the United States, our bankruptcy laws are really reasonable.

I don't claim 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 of 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 a lot 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 readily available options. When getting some advice, always remember that there are always possibilities when it relates to Bankruptcy in Australia, so do some investigation, and Good luck!

If you want to find out more about just what to do, where to turn and what questions to ask about Bankruptcy, then feel free to consult with Bankruptcy Experts Australia on 1300 795 575, or visit our website:bankruptcyexpertsAustralia.com.au.

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

Bankruptcy Australia is a challenging process, and you ought to ensure you get the right guidance. And when it comes to your income being affected, the answer to the question is maybe. The very first thing you have to know about going bankrupt is there is no limitation on how much you can earn. However, I will say that your income is a significant consideration when working through when it comes to Bankruptcy.

The first thing you need to learn 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 quantity you earn each year. A dependant is someone who lives with you and earns less than $3,124 per year (regardless of their age).

You can make an application for a hardship variation that increases the threshold amount, if you have expenses in Australia like medical, child care, substantial travel to and from work, or a situation where your partner used to work but is not able to add to the household income.

Some of the informative parts of Bankruptcy is that your employer will not be notified when you file for bankruptcy. Also, Child support is always taken into account 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 changed net income limit will be $55,332.10.

There are much more issues covering income and what is or isn't considered income - if you're not exactly sure, it's ideal to get experienced advice. The reason you will need to consider your income as a part of the Big 5 questions here is that bankruptcy is in some cases not an economically viable option.

If one of your creditors is the ATO (for unpaid taxes), then your tax refund may 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 just as long as that doesn't take you over your threshold income limitations.

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

If you wish to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to contact Bankruptcy Experts Australia on 1300 795 575, or check out our website: bankruptcyexpertsAustralia.com.au.

Bankruptcy in Australia - Are you going to get bitten?

When people in Australia ask me about Bankruptcy, I let them know the simple 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 passes away. The boy was hesitant, but the rattlesnake vowed not to bite him in exchange for the ride. They travelled together only for the snake to in the end bite the boy despite his vow not to do so. The snake's reply was 'You knew what I was when you picked me up.

Asking for the right financial advice in Australia when it pertains to Bankruptcy is a whole lot like that little boy's experience, fraught with risk and danger, and usually skewed for the benefit of the individual providing the advice. In many cases you'll get bitten unless you know what you've picked up before you move forward (avoid the rattlesnakes). I learned the problem with receiving financial advice as a teenager, and it has been vital 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 very high and investing your money was rather profitable. I spent some time researching many different investment options, and I went to visit a few financial advisors. It was obvious that they had more money than I did: they had great suits and plush offices, they all seemed to exude confidence and have all the solutions. What struck me was that they all had a really different strategy of what I should do. This confused me a lot that it put me off the whole idea of opting for any of them.

I'm sure currently you have read enough on the internet to be totally unclear about Bankruptcy and precisely what to do. It would probably be easier for me to help you learn about the nature of the financial snakes you could be grabbing while you are attempting to get to the bottom of your financial concerns in Australia. Basically, you have to try and recognize what your overarching options are, do your 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 feel like the go-to choice when you appear to be in trouble. But certainly there is only just so much assistance they can give on this matter. There are certainly specialist legal advisors in bankruptcy, but their knowledge comes with a hefty price.

Another possibility you may think about is your accountant - they are incredibly helpful and vital to the task of running 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 talk about debt consolidation, personal insolvency agreements, and basically all you should understand when it comes to Bankruptcy.

If you want to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to contact Bankruptcy Experts Australia on 1300 795 575, or visit our website: bankruptcyexpertsAustralia.com.au.

Bankruptcy in Australia - Changes that help Small Business and Entrepreneurs

Do you know how much Bankruptcy Australia is changing? The Australian Government in late 2015 put up some foundational changes to the Bankruptcy Laws in Australia. The most significant of these is the length of time that a person is bankrupt for. At the moment, there is a minimum amount of time that you must remain bankrupt, having said that, this 3 year period may very well be reduced to just 12 months. So if you are inquiring about Bankruptcy, this news may be rather important to you.

Mark Carnegie in the Financial Review on the 7th December 2015 recommended 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 shifts 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 therefore 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 debate about this Bankruptcy issue in Australia that some make is that this change will only invite fraudulent behavior opening pandora's box so to speak for the unscrupulous to maltreatment of the bankruptcy system. We have looked at the minimum, but on the other side of the problem, The government is not submitting to change the maximum term of 8 years if it deems a bankrupt has represented oneself in an unethical or fraudulent way, and there are no proposals to change the outcomes of misrepresenting yourself or financial position when filing for bankruptcy in Australia.

As an insolvency professional in Australia, I have a reasonable share of experience when it comes to Bankruptcy. And having dealt with countless bankruptcy cases in Australia I have never caught someone abusing the system or acting in an immoral way as to exploit the insolvency laws in Australia. When it comes to Bankruptcy, every week I help a small business owner or entrepreneur suffer through the very difficult task of bankruptcy, not once have I thought they are happy about it. The typical small business owner or entrepreneur in Australia does not start out taking enormous financial risks with the intention to fail. The media really 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 best 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, employers keeping this country going.

There certainly is a fine line with what the government is trying to do here, because they are attempting to balance helping people who have made decisions out of their control, and deterring people from making oversights that land them in trouble and as a result an issue of Bankruptcy. However you likewise don't want to wipe out the experience and knowledge that business owners have. You surely don't want to shatter people simply because they have had a genuine failure in a large or small start-up venture that has not panned out.

At the big end of town large established 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 insolvency were minimized because directors are troubled they'll be personally responsible in an insolvency arrangement if the new project doesn't work out.

The government's proposed 'safe haven' changes for directors of companies will enable Australia to more fully explore and innovate, which will make big changes for Bankruptcy. I can not imagine, that these adjustments will be damaging to Australia's economy, in fact these bankruptcy laws will save the tax payer in all areas of health - Especially in the mental health sector because the emotional cost of bankruptcy is extensive. When it comes to Bankruptcy in Australia not a day goes by where I don't hear the tragic stories of relationship failures, thoughts of suicide and the list goes on.

Bankruptcy helps save lives, and it could save yours. If you want some help with your debts in Australia or are just considering Bankruptcy, feel free to call us here at Bankruptcy Experts Australia on 1300 795 575, or visit our website: bankruptcyexpertsaustralia.com.au