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