Monday, August 7, 2017

Bankruptcy Australia, What is the Deal with Debts?


So what Debts are wiped out if I go Bankrupt?

The uncomplicated answer is that when it involves Bankruptcy most debts are wiped, and I have provided a summary below for you to look at.

But, put simply some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) and any debts arising from uninsured Motor-vehicle claims and educational debts like HECS or FEE-HELP. These debts are not cleared away when you file for bankruptcy.

What about Secured Debts?

A secured debt is a vehicle loan or a home loan; it is a debt that has some real security connected to it. So for instance if you buy a new car for $40,000 dollars the security for this car is the actual car itself.

So, can my secured debts be eliminated if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt cleared away if you simply hand back the car. So the lesson is that you cannot have your cake and eat it too (so to speak), so yes all of your secured debts may be wiped but the asset will need to be sold or returned. This is just one facet that, when it comes to Bankruptcy, it is important to get professional guidance - like that available at Bankruptcy Experts Australia.

What about my Tax Debts with the ATO can they be wiped out If I go bankrupt?

Yes they can, both business and personal debts owing to the ATO can be cleared away with bankruptcy. If you have a business with any type of debts get some advice because it is not always so basic. Feel free to call us here at Bankruptcy Experts Australia if you have any questions on 1300 795 575. Or feel free to explore our website: www.bankruptcyexpertsAustralia.com.au

What about my business or Company debts?


Sometimes when it comes to Bankruptcy we can assist you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Normally you may need to liquidate a company to deal with the debt that way. When it comes to Bankruptcy, it can be a complicated area, so remember there are implications for a business owner such as insolvent trading. At Bankruptcy Experts Australia we specialise in business and personal debts so contact us here at Bankruptcy Experts Australia if you have any questions about Bankruptcy on 1300 795 575. Or feel free to visit our website: www.bankruptcyexpertsAustralia.com.au

Monday, May 22, 2017

Bankruptcy, Will I lose my Superannuation?



Bankruptcy in Australia can be complicated and difficult to understand. A question we often get asked here at Bankruptcy Experts Australia is 'what happens to my super if I declare Bankruptcy'? The solution for most is simple, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then absolutely nothing happens; your super is 100 % safe when it involves Bankruptcy.


What if I have a Self Managed Super Fund?

This is a growing concern, look at the evolving number of members of Self-Managed Super Funds ("SMSFs") in the last few years; the ATO tells us it has expanded Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it involves Bankruptcy?

Remember Bankruptcy Experts Australia is not suggesting this short article is the entire story, if you have any questions feel free to contact us on 1300 795 575. No matter if you call us or another person it does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we suggest you ask for both legal and financial advice before proceeding with any of the actions proposed in this article.

What is a Disqualified Person?

First and foremost, if you are taking into account Bankruptcy, you can not be a part of a SMSF. Why? Because if you are dealing with bankruptcy, you will be grouped as a 'disqualified person'. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem because usually most of the SMSFs are just 2 people, which means the two of these members must also be the individual trustees. The position of trustee presents a lot of legal rules, and if you are in this role I would highly urge you to get knowledgeable about them all-- for example the fact that you can not 'know or suspect' that one of you are bankrupt. So you can see how an individual bankruptcy can be very destructive to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How much time do I have to restructure my SMSF Fund after I'm bankrupt?

So what happens if one of the members of an SMSF does enter Bankruptcy?
For starters, the SMSF will need to be restructured. This means that you will have to consider your over-all structure and see to it that it is meeting the basic conditions, including having a new trustee that is not having issues with Bankruptcy. The Australian Tax office will offer you a 6 month 'grace period' to get this done before you face penalties. And bear in mind, sometimes the best plan would be to simply roll the fund into an industry or corporate fund.
Beyond these large scale reorganizing issues, there is a lot of paperwork to deal with too, and you need to be constantly keeping the ATO informed of what is happening. This suggests you need to let them know that you have a bankruptcy issue with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they must also notify ASIC of their resignation.

During the course of that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are uncertain call Bankruptcy Experts Australia for some free advice on 1300 795 575.

What if I use a single member fund?

If you are a single member fund, then you will have to appoint a new director, and it will then be their obligation to oversee the sale and transfer of assets into a managed fund. If there are two or more members, than the bankrupt member will have to resign and the other member will remove the property and halve the proceeds. They would then want to decide if they want to remain as a single member SMSF, or if they intend to roll everything into a managed fund. If both members are entering bankruptcy, then they will need to sell all assets as soon as possible and transfer the liquid assets to the managed fund.

From this you can notice how when it comes to Bankruptcy, even if one single member is facing issues, it can affect the very existence of an SMSF. If you are actually facing this matter yourself, or with a partner in a SMSF, please seek financial advice to make certain you are fulfilling the ATO requirements.

A simple solution ...


As I proposed earlier, a straightforward solution to your SMSF situation is to put your super back into a normal regulated managed fund before bankruptcy and save yourself all the headaches outlined above. Bankruptcy is never easy, but getting proper advice is the best 1st step. If you want to discuss your possibilities further, contact us at Bankruptcy Experts Australia or visit our website: www.bankruptcyexpertsAustralia.com.au or just give us a call on 1300 795 575.

Wednesday, January 11, 2017

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


Bankruptcy Australia is a difficult to understand process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that not much concerns people more than the notion of losing the family home or apartment. Almost everyone is emotionally connected to their home - it's where the kids have grown, it's where you take pleasure in life on a day to day basis.



Will you lose your house if you go bankrupt? The reply is a resounding maybe. (not very useful, I know) People typically imagine it's an inevitable consequence and a part of Bankruptcy, and hence push themselves to the brink of insanity to not lose the family home. But when it comes to the whole process of Bankruptcy, a key perk of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you've agreed to pay back the debt you are in.

So how is it possible to keep my Australia house, you ask? It's easier if I explain the basic idea behind the Bankruptcy process as administered by the trustee, then you'll have a clearer idea.

The role of the bankruptcy trustee is to firstly abide by the regulation of the bankruptcy act 1966 (it's a very dry read about 600 pages if you are curious).

Within that regulatory framework, the trustee is to help recover monies owed to your creditors, that is accomplished in a bunch of different ways but it mainly comes down to income and assets. The trustees role is to collect payments beyond your income threshold. The other role is to sell off any assets that can contribute to repaying your debts.

What this resembles is that yes the trustee will sell your house right? Not normally. The only reason the trustee will sell any asset including your house is to get money to repay your debts. If there is no equity on your property then it's pointless to sell your home. This is happening increasingly more since the GFC as house prices in many areas have been heading south so what you paid 4 years ago may not always reflect the price today.

A quick tip here if you have a house in Australia and are looking at Bankruptcy: get an expert to help you through this process, there are plenty of variables in these scenarios that need to be considered.

You might wonder, why would the bank want bankrupt customers? wouldn't they hope to sell your house and not take the risk? The bank that has generously lent you the money for your house is generating good money every month in interest out of you, month in month out, as long as you keep up to date with your payments then the bank really wants you in there at all costs. Essentially however it's not the bank's call if the trustee determines that there is ample equity in your house the trustee will force you and the bank to sell the house.

When you file for bankruptcy you are asked to mark the value of your house and the portion you owe on the house. A tip if you are trying to work out the value of your house: use a registered valuer as this will give you peace of mind, don't use your neighbours' gut feel suggestions or a real estate agents advice to come to this figure. When you get a valuer out to your property, make certain you tell the valuer to value the property for a quick sale, make sure you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to offer two valuations: one for a quick sale and one for a well marketed non time sensitive sale. Nowadays that's not the case, but if you meet them and let them know you need to sell your home in the next 30 days you may control the result. The idea is that you want a life-like sell now figure.

There are two reasons this valuation technique is critical to you: one you will have peace of mind ascertaining the market value of your house, and after that you can easily build your equity position. Secondly, your house may be really worth so much more than you thought. Get some guidance before carrying this out. The amount of times I've met with clients that have sold their family home of 20 years only to learn I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another main consideration is ownership, often houses are purchased in joint names. In other words a couple may be a house 50/50 using both incomes to make the payments. If one party declares bankruptcy and the other party doesn't, the equity is only factored on the 50 % of the property.

When it relates to Bankruptcy, this is just one of likely numerous scenarios that are possible when it comes down to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of the house in bankruptcy also. I should repeat this but get some information on this area of Bankruptcy because it is very tricky and each and every case is different.


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

Wednesday, November 16, 2016

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.

Monday, August 8, 2016

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.

Friday, August 5, 2016

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.

Sunday, July 3, 2016

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.