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.