Do You Need Bankruptcy Advice?
Most people regard bankruptcy as a last resort to be pursued when all other options haven’t work. It’s not the easiest answer and will have long-lasting consequences. The good news however is that bankruptcy will eliminate most unsecured debt and allow someone a fresh start.
What is Bankruptcy?
Actually, there is no one answer to “what is bankruptcy” as the explination can be both simple and complex! Bankruptcy was set up by the government to allow those with no other options a way to eliminate most debt and get their lives back. As is true of most government programs, it has a lot of rules and can be very confusing.
There are two ways to become bankrupt.
- Personally filing bankruptcy with a debtor’s petition;
- Being forced into bankruptcy by a creditor owed more than $5,000.
Filing for Bankruptcy will Stop Creditors Actions
Collection calls and letters and most legal action will stop almost immediately.
The Trustee will Control the Assets
Your estate/assets will be administered by AFSA or a registered trustee who will sell the non-exempt assets, such as a homes.
Assets that will be kept include:
- Personal and household items and tools, up to a limit;
- Vehicle(s), up to a limit;
- Superannuation funds;
- Personal injury compensation;
- Life insurance and Centrelink payments.
Some Debts Must Still be Paid
These debts include:
- Court fines and penalties;
- Unliquidated damages resulting from accidents;
- Student loans and HELP debts.
Bankruptcy and Employment
Before making the decision to file for bankruptcy, check with any professional organizations you are registered with and find out if bankruptcy would affect licenses or your occupation. Employers are not usually notified of an employee’s bankruptcy.
Responsibilities to expect as a result of the Bankruptcy Process
Running a Business:
It’s possible to run a business. The Court’s permission is needed to be a director of a company or involved in its management.
It is an offense to borrow money or use credit without telling the person that you are an undischarged bankrupt.
Moving and Overseas Travel:
The trustee must be told of any address or name change. Travel outside the country requires written approval of the trustee.
How Long Does the Bankruptcy Last?
A bankruptcy lasts for three years in most cases. However, if the trustee objects to the discharge, then the bankruptcy can be extended for five more years.
Offenses Under The Bankruptcy Act
There are some important offenses that could result in anything from six months to three years in prison if convicted. These offenses include:
- Attempting to cheat creditors by disposing of property before the bankruptcy;
- Failing to disclose all assets;
- Becoming bankrupt because of gambling and speculation;
- Deliberately getting credit which cannot be repaid;
- Incurring debts during the bankruptcy over a set limit without disclosing the bankruptcy;
- Leaving the country without written permission from the trustee;
- Operating a business under an assumed name without disclosing the bankruptcy.
The best Bankruptcy Advice that could be given is to think carefully before going forward. It’s not an easy or quick process but, if chosen correctly and done properly then in the end, life can be much better. For one final bit of bankruptcy advice, set up a budget and stick to it.