Losing your house: How much do you understand about Going Bankrupt in Australia?

The most important question people have when they come to our team regarding Going Bankrupt is without a doubt ‘Can I manage to keep my house?’ and sometimes the answer is yes, you can manage to keep your house.

The only reason you can be driven to sell your family home when you declare bankruptcy is due to the fact that you have so much equity in the home that it is believed an asset. Please read these basic hypothetical case studies below to get your head around Going Bankrupt and how it has an effect on houses in Australia. Remember If you want to know more about Going Bankrupt and houses feel free to call us here at Bankruptcy Experts on 1300 795 575, or visit our website: http://www.BankruptcyExperts.com.au

Case Study 1. (Mike & Sue Smith)

5 years ago Mike and Sue purchased a house in a mining town for $450,000. At this time the mining boom was keeping all the property prices nice and high. Now they are needing to look at Going Bankrupt because they have substantial debts of $80,000 on top of their mortgage and credit card and tax debt.

They really wish to keep their house but wonder if they can, they know that house prices if anything have gone down in the area in the last 5 years so to be safe they think that their house is still only worth $450,000 after all these years, to be sure they searched http://www.realestate.com.au/ sold section of the website to see what other houses in the streets nearby have sold for fairly recently.

Unfortunately they have not paid any principal of the home loan over the last 5 years, mainly just interest, so they still owe $450,000.

Current House Value = $450,000.

Current Mortgage Value = $450,000.

Net Equity Value = $0.

Because there is no equity in this particular property the trustee will not ask Mike and Sue to sell their property when they go bankrupt, as long as they keep up the mortgage payments then all will be well for these people for the 3 years they are in bankruptcy.

At the end of the bankruptcy time period the trustee will write to them and ask if they want to take over ownership of their house again and so long as it has not grown in price over the 3 years they have been bankrupt they will be asked to make an offer to have their house back. This is normally somewhere between $3,000 and $5,000 to cover the legal costs of modifying the land title deed etc.

Now let’s look at a slightly different example of Going Bankrupt and houses.

Case Study 2. (Bill & Michelle Johnson)

2 years ago Bill and Michelle bought a townhouse in a wonderful suburb of Australia for $850,000 they tipped in $50,000 as a deposit and now the townhouse two years later is worth $900,000.

Current House Value = $900,000.

Current Mortgage Value = $800,000.

Net Equity Value = $100,000.

As a result of a recent business failing Bill is about $240,000 in debt. Michelle who does work in banking has a separate job and no other debt apart from the mortgage. Bill cannot pay his debts so he is reviewing Going Bankrupt. Michelle is bothered that she too may need to file for bankruptcy or be forced into it thanks to the house loan.

Within this particular case the trustee is required to access or get their hands on Bill’s part of the equity which is $50,000 less selling costs. They may do this in a few ways; 1. Make them sell the home. 2. Invite Michelle to buy Bills half of the equity. 3. leave them in the home – but It’s very unlikely with this case that the trustee would be happy to leave Bill and Michelle in the house because there is just too much equity.

So Michelle may be able to purchase Bill’s share of the equity by coming up with $50,000 and buying out Bills’ half and from that moment its now 100 % Michelle’s house.

Property and Going Bankrupt in Australia is confusing and demanding, these two case studies above are just the tip of the iceberg as far as your options in Australia are concerned. If you need to know more about Going Bankrupt and houses feel free to consult with us here at Bankruptcy Experts on 1300 795 575, or go to our website: www.BankruptcyExperts.com.au.

Going Bankrupt Australia, So what is the Deal with Debts?

Which Debts are erased if I go Bankrupt?

The easy answer is that when it involves Going Bankrupt most debts are wiped, and I have provided a chart below for you to look at.

But, simply put some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) alongside any debts arising from uninsured Motor-vehicle claims and educational debts including HECS or FEE-HELP. These debts are not erased 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 genuine security linked to it. So for example if you buy a new car for $40,000 dollars the security for that car is the actual car itself.

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

Yes. If you have a car loan for $40,000 you can have that debt removed if you simply return 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 might be wiped but the asset has to be sold or returned. This is just one aspect that, when it comes to Going Bankrupt, it is vital to get professional help – like that offered at Fresh Start Solutions Australia.

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

Yes they can, both business and personal debts owing to the ATO can be eliminated with bankruptcy. If you have a business with any sort of debts get some advice because it is not always so straightforward. Feel free to call us here over at Fresh Start Solutions Australia if you have any questions on 1300 818 575. Or feel free to visit our website: http://www.freshstartsolutions.com.au/bankruptcy-Australia.com.au

What about my business or Company debts?

Sometimes when it concerns Going Bankrupt we can aid you with your business debts, call us concerning this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Usually you may need to liquidate a company to deal with the debt this way. When it comes to Going Bankrupt, it can be a confusing area, so remember there are implications for a business owner such as insolvent trading. At Fresh Start Solutions Australia we specialise in business and personal debts so call us here at Fresh Start Solutions Australia if you have any questions regarding Going Bankrupt on 1300 818 575. Or feel free to explore our website: http://www.freshstartsolutions.com.au/bankruptcy-Australia.com.au

Going Bankrupt, Will I lose my Superannuation?

Going Bankrupt in Australia can be convoluted and perplexing. A question we normally get asked here over at Fresh Start Solutions Australia is ‘what happens to my super if I declare Bankruptcy’? The answer for most is easy, if your super is normally in a regulated fund or industry fund like Sunsuper or Host Plus then absolutely nothing happens; your super is 100 % safe when it comes to Going Bankrupt.

What if I have a Self Managed Super Fund?

This is a growing concern, look at the increasing number of members of Self-Managed Super Funds (“SMSFs”) lately; the ATO tells us it has increased Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it concerns Going Bankrupt?

Remember Fresh Start Solutions Australia is not suggesting this article is the complete story, if you have any questions feel free to contact us on 1300 818 575. No matter if you call us or someone else it doesn’t matter, just please don’t walk into bankruptcy blind when it comes to your SMSF indeed we highly recommend you find both legal and financial advice before proceeding with any of the actions suggested in this article.

What is a Disqualified Person?

First and foremost, if you are thinking about Going Bankrupt, you can not be a part of a SMSF. Why? Because if you are dealing with bankruptcy, you will be identified as a ‘disqualified person’. And a disqualified person cannot operate as an Individual Trustee. This poses a problem due to the fact that usually most of the SMSFs are just 2 people, which means the two of these members will need to also be the individual trustees. The job of trustee sets a lot of legal rules, and if you are in this position I would highly recommend you to end up being familiar with 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 harmful to a SMSF and as you can imagine the process of Going Bankrupt for a SMSF is rather convoluted.

How long do I have so as to restructure my SMSF Fund once I’m bankrupt?

So what comes about if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will have to be reorganized. This means that you will need to consider your over-all structure and ensure it is meeting the basic conditions, including having a new trustee that is not suffering from issues with Bankruptcy. The Australian Tax office will offer you a 6 month ‘grace period’ to get this done before you face penalties. And keep in mind, sometimes the most ideal 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 continuously keeping the ATO informed of what is happening. This means you ought to let them know that you have a bankruptcy concern 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 Fresh Start Solutions Australia for some free advice on 1300 818 575.

What if I have a single member fund?

If you are a single member fund, then you will have to appoint a new director, and it will then end up being their responsibility to oversee the sale and transfer of assets into a managed fund. If there are two or more members, than the bankrupt member will need to resign and the other member will clear away the property and halve the proceeds. They would then need to decide if they would like 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 would 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 Going Bankrupt, even though one single member is dealing with issues, it can affect the very existence of an SMSF. If you are already facing this problem yourself, or with a partner in a SMSF, please seek financial advice to make certain you are meeting the ATO requirements.

A simple solution …

As I suggested earlier, a simple solution to your SMSF problem is to put your super back into a normal regulated managed fund before bankruptcy and save yourself all the frustrations outlined above. Going Bankrupt is never easy, but getting proper advice is the best first step. If you want to discuss your options further, contact us at Fresh Start Solutions Australia or visit our website: http://www.freshstartsolutions.com.au/bankruptcy-Australia.com.au or just give us a call on 1300 818 575.

 

Going Bankrupt in Australia – Will I lose my home if I go bankrupt?

 

Going Bankrupt Australia is a difficult to understand process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that absolutely nothing concerns people more than the notion of losing the family home or apartment. Almost everybody is sentimentally connected to their home – it’s where the kids have grown up, it’s where you take pleasure in life on a day to day basis.

Will you lose your house if you go bankrupt? The answer is a resounding maybe. (not very useful, I know) People typically presume it’s an inevitable consequence and a part of Going Bankrupt, and because of this push themselves to the brink of insanity to not lose the family home. But when it comes to the whole process of Going Bankrupt, a key strength of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you’ve accepted 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 theory behind the Going Bankrupt process as administered by the trustee, then you’ll have a more clear picture.

The purpose of the bankruptcy trustee is to firstly comply with the regulation of the bankruptcy act 1966 (it’s a very boring 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 executed in a bunch of various ways but it mainly comes down to income and assets. The trustees role is to collect payments over and above your income threshold. The other role is to sell any assets that can contribute to paying back your debts.

What this sounds like 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 in your house then it’s pointless to sell your home. This is happening much more since the GFC as house prices in many regions 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 Going Bankrupt: get a professional to help you through this process, there are a lot of variables in these scenarios that have 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 earning good money every month in interest out of you, month in month out, so long as you keep up to date with your fees then the bank desires you in there at all costs. Essentially however it’s not the bank’s call if the trustee establishes that there is lots of 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 list the value of your house and the amount of money you owe on the house. A tip if you are attempting 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 recommendations or a real estate agents advice to reach this figure. When you get a valuer out to your home, ensure you tell the valuer to value the property for a quick sale, make certain you mow the lawn and don’t leave the kitchen in a mess also.

Valuers used to provide 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 tell them you need to sell your home in the next 30 days you may sway the result. The idea is that you want a sound sell now figure.

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

When it comes to Going Bankrupt and houses, another primary consideration is ownership, in many cases houses are bought in joint names. To puts it simply a couple may be a house 50/50 using both incomes to make the payments. If one party declares bankruptcy and the other party does not, the equity is only factored on the 50 % of the property.

When it relates to Going Bankrupt, this is just one of potentially hundreds of scenarios that are possible when it comes to the family home. Bear in mind the non-bankrupt party can buy the bankrupt’s portion of the home in bankruptcy also. I should repeat this but get some guidance on this area of Going Bankrupt because it is very tricky and every case is different.

If you want to learn more about what to do, where to turn and what questions to ask about Going Bankrupt, then feel free to call Fresh Start Solutions Australia on 1300 818 575, or visit our website: http://www.freshstartsolutions.com.au

in Australia is a difficult to understand process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that absolutely nothing concerns people more than the notion of losing the family home or apartment. Almost everybody is sentimentally connected to their home – it’s where the kids have grown up, it’s where you take pleasure in life on a day to day basis.

Will you lose your house if you go bankrupt? The answer is a resounding maybe. (not very useful, I know) People typically presume it’s an inevitable consequence and a part of Going Bankrupt, and because of this push themselves to the brink of insanity to not lose the family home. But when it comes to the whole process of Going Bankrupt, a key strength of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you’ve accepted 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 theory behind the Going Bankrupt process as administered by the trustee, then you’ll have a more clear picture.

The purpose of the bankruptcy trustee is to firstly comply with the regulation of the bankruptcy act 1966 (it’s a very boring 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 executed in a bunch of various ways but it mainly comes down to income and assets. The trustees role is to collect payments over and above your income threshold. The other role is to sell any assets that can contribute to paying back your debts.

What this sounds like 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 in your house then it’s pointless to sell your home. This is happening much more since the GFC as house prices in many regions 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 Going Bankrupt: get a professional to help you through this process, there are a lot of variables in these scenarios that have 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 earning good money every month in interest out of you, month in month out, so long as you keep up to date with your fees then the bank desires you in there at all costs. Essentially however it’s not the bank’s call if the trustee establishes that there is lots of 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 list the value of your house and the amount of money you owe on the house. A tip if you are attempting 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 recommendations or a real estate agents advice to reach this figure. When you get a valuer out to your home, ensure you tell the valuer to value the property for a quick sale, make certain you mow the lawn and don’t leave the kitchen in a mess also.

Valuers used to provide 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 tell them you need to sell your home in the next 30 days you may sway the result. The idea is that you want a sound sell now figure.

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

When it comes to Going Bankrupt and houses, another primary consideration is ownership, in many cases houses are bought in joint names. To puts it simply a couple may be a house 50/50 using both incomes to make the payments. If one party declares bankruptcy and the other party does not, the equity is only factored on the 50 % of the property.

When it relates to Going Bankrupt, this is just one of potentially hundreds of scenarios that are possible when it comes to the family home. Bear in mind the non-bankrupt party can buy the bankrupt’s portion of the home in bankruptcy also. I should repeat this but get some guidance on this area of Going Bankrupt because it is very tricky and every case is different.

If you want to learn more about what to do, where to turn and what questions to ask about Going Bankrupt, then feel free to call Fresh Start Solutions Australia on 1300 818 575, or visit our website: http://www.freshstartsolutions.com.au

Going Bankrupt in Australia – Who exactly do I talk to?

Should I speak with my accountant about Going Bankrupt?

The answer seems clear 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 resounding No! It’s not that your accountant won’t have your best interests at heart when it comes to Going Bankrupt, 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 put in very little to no time on bankruptcy, it’s generally performed as a post graduate speciality program for those who want to work in the field. Unless your accountant is an insolvency expert, he would not know that a lot about the implications of Going Bankrupt, I can guarantee 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 consult my Solicitor about Going Bankrupt?

No! You can speak to your solicitor in Australia but more than likely it won’t do you much good. Solicitors are certainly good at undertaking things lawyers do, like assisting you do your Will and buying your house and trying to keep you out of court if you’re lucky. When it concerns Going Bankrupt, the specialists in Australia tend to have either a legal or accounting background, and the main reason for that is simply that you can’t enrol in the post graduate study to become a qualified insolvency practitioner until you have a law or accounting degree.

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

Should I speak with a financial counsellor about Going Bankrupt?

Yes! There are plenty of financial counselling services to assist you with this, they have no hidden agendas and they’re a great option for really helping you think through your situation when it comes to Going Bankrupt. If you end up freaking out constantly, not sleeping, not eating or over-eating and thinking of money pressures constantly, then get some help.

There are also charities around Australia like Lifeline that offer an excellent service. They will be a sounding board if you just need someone to review with you what your alternatives are. Don’t let your financial problem destroy your life – in the end it’s just money.

If you need to learn more about what to do, where to turn and what matters to ask about Going Bankrupt, then feel free to call Fresh Start Solutions Australia on 1300 818 575, or visit our website: .freshstartsolutions.com.au/bankruptcy-Australia

Going Bankrupt in Australia – Am I going to lose my job if I go bankrupt?

Essentially everyone experiencing Going Bankrupt Australia has this concern about their job, and the answer to the question is ‘maybe’. The trouble with some professions isn’t that you can’t do the job any longer, it’s more a problem of professional bodies or organizations that view bankruptcy in a dim light and can make things very difficult for you.

When it comes to Going Bankrupt and employment in Australia, what I would recommend is that you do your very own homework here, do the research and go through that process first before filing for bankruptcy considering that may help you decide. Check if your line of work is on the list below. If it is, I ‘d consult with them directly and talk about your situation. Some associations won’t have a concern with your bankruptcy so long as it wasn’t accompanied by shady or questionable behaviour.

If you are affected by this part of Going Bankrupt and licences, Most of the time you won’t lose your Licence permanently; it just gets suspended for the 3 years of your bankruptcy. If your profession happens to be on the list and you’ve spoken with them but they won’t budge, then I ‘d suggest you seek some experienced advice. This may be just one of those rare occasions when I ‘d advise using a Debt Agreement or a Personal Insolvency Agreement.

Remember most of the time you don’t have to exit the business you are employed in; you just have to work under another’s Licence for a time. In the building sector this is particularly relevant: if you’re an electrician for example, there is very little stopping you working with another electrician in Australia under their Licence.

Please check the table below, it handles the license and company side of Going Bankrupt. Its organised on a state by state basis, and you’ll discover that there’s a listing called “Operating a business.” Please don’t worry if you run your own company. One of the limitations of bankruptcy is you can’t be a director of a company, but all this really means is that you should restructure your business.

Just for your peace of mind I’ll tell you now that you can still own and run your business as a sole trader. There are no restrictions: you can hire staff and turn over any amount of money. Typically people who run their own business have debts that are business related and it can come to be very complicated, so it’s best to get some professional advice instead of going it alone.

If you want to learn more about what to do, where to turn and what questions to ask about Going Bankrupt, then feel free to speak with Fresh Start Solutions Australia on 1300 818 575, or visit our website: http://www.freshstartsolutions.com.au/bankruptcy-Australia

Going Bankrupt in Australia – Will I lose my business if I go bankrupt?

When people in Australia come to me trying to speak about Going Bankrupt, they are usually full of questions. The internet has lots 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 most general troubles is ‘Will I lose my business if I declare bankruptcy?’ The quick answer is no. If you are a manager of a business any shape or size you can keep your business if you wish to. In Australia, businesses that are insolvent have a few options such as liquidation, voluntary administration and so on. It’s individuals who go bankrupt not companies.

Going Bankrupt is a complicated area so get some professional advice on this one if you have a business. Generally speaking, the financial obligations in a business and personal debts go together when a business owner goes bankrupt. There are some vital implications for directors of companies when it pertains to Going Bankrupt in Australia: A bankrupt can not be a director of a company, so if you have a pty ltd company you will likely need to resign as a director after you’re bankrupt.

A limitation that applies when you are generally bankrupt as a business owner is that you may be in your own business as a sole trader only. There are things you should reveal as a part of that but in essence you can still run your business. 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 consequently you can no longer trade without that license, so make sure you are asking the right questions when it involves licenses and Going Bankrupt in Australia.

Having said that if your business is not impacted directly by such issues, then you’ll need 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 and after that open the doors the next day like not a thing had happened. There are laws in place to prevent what is called phoenix companies popping up out of the ashes of an old company.

Having said that, it’s just a matter of talking with the right people about Going Bankrupt. Here in this circumstance you may believe you need a liquidator for your business, and you could be right, but bear in mind that every liquidator is varied and have their own motives. Liquidators profit from your liquidation – heaps of money – so just what advice do you believe you will get?

When it comes to Going Bankrupt, I think that giving generic advice in this area is essentially dangerous as it can have very major implications for directors and business owners. This is due to the fact that it is just one of those cases where what the right guidance for one business owner is the inappropriate advice for the other. There are some basics however, that you may benefit from. There is no reduce to the size of the business you run though you are bankrupt. You can employ staff. You can continue to deal with your providers under certain conditions, the main one being you will need to meet the payment terms agreed upon.

So when it comes to Going Bankrupt, don’t get overly worried about what you can and can’t do as a business owner, just get the best advice … If you wish to learn more about what to do, exactly where to turn and what questions to ask about Going Bankrupt, then feel free to contact Fresh Start Solutions Australia on 1300 818 575, or visit our website:.freshstartsolutions.com.au/bankruptcy-Australia.

Going Bankrupt in Australia – Choices, Choice, Choices

 

When it comes down to Going Bankrupt in Australia, there are a lot of options that we get given depending on who we are, who we speak with, and exactly what has gone wrong. The most common confusion I see with Going Bankrupt is when it comes to choosing between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.

Should I consolidate my debts?

When it comes to Going Bankrupt in Australia, most of the info you receive on this subject matter will reflect the interests of the advice giver. That is why, if you call a debt consolidation firm, I can guarantee you they will tell you to consolidate your debts. The debt consolidation business is a multi-billion dollar industry making money in one very basic way: charging you a fee for aiding you wrap all of your credit card and personal loans into a single neat and tidy bundle.

I hate to tell you this but these guys aren’t doing it for free. Please don’t misunderstand me: if you consider your financial problems in Australia could be solved by paying less interest, then go ahead and check out the choices. Even a small amount of interest saved over years quickly adds up.

Normally I find if you read this blog you’ve most likely attempted to consolidate your debts already and come to the following realisations similar to these:

• Your credit rating is no good, and your credit file already has defaults on it so nobody will offer you a loan, consolidated or otherwise,.
• By the time you work all of it out, you’re so far down a hole that saving a little bit of interest just won’t make a great deal of difference,.
• You’ve most likely arrived at the point where you’ve had more than enough, you’re emotionally burnt out, you can’t go on yet another day ignoring blocked calls on your phone, ignoring the demands in the mail and so on.

Personal Insolvency Agreements

So when it comes to Going Bankrupt in Australia, what’s the difference between a Debt Agreement and a Personal Insolvency Agreement?

Adaptability is the main thing Personal Insolvency Agreements (PIA) have in their favour. They’re also administered by a registered and – might I add – regulated trustee featuring the government trustee ITSA, and not a private business that advertises on TV. Basically this process resembles Debt Agreements (DA): The trustee holds a meeting with the people you owe money to and they arrange a deal on your behalf. You can offer a lump sum settlement figure or take part in a payment plan, or maybe you can offer them assets instead of cash. This may sound acceptable when it comes to the problems with Going Bankrupt – that is until you discover that one of the obstacles with PIA’s is that 75 % of the people you owe money to have to come to an understanding the deal. If they don’t, your proposal is denied or will need to be renegotiated.

Generally the people you owe money prefer all their money back plus interest. Sometimes they’ll opt for beneath the amount you owe them – it’s typically 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 just because your creditors are greedy or have a mean streak, it’s because the administrators take 20 % of whatever is agreed 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 Going Bankrupt and insolvency I’ve come across creditors going 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 shrewd lawyers and some very clever structures 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 wish to find out more about what to do, where to turn and what questions to ask about Going Bankrupt, then feel free to contact Fresh Start Solutions Australia on 1300 818 575, or visit our website: freshstartsolutions.com.au/bankruptcy-Australia

Going Bankrupt in Australia – does it matter if it is voluntary?

When it comes to Going Bankrupt Australia, usually people aren’t aware that there can be both voluntary, and involuntary bankruptcy – both have different approaches and rules.

Involuntary bankruptcy occurs when somebody you owe money to applies to the court to declare you bankrupt. Commonly when you get one of these notices, you have normally 21 days to pay all the debt. If you don’t, then the creditor goes back to the court and asks the court to provide a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the documentation in and afterwards you are bankrupt.

You can challenge a bankruptcy notice by going to court following the 21 days have expired and put your case forward, to stop it going to the next level. Apart from the way you became bankrupt there is in fact no distinction between Involuntary Bankruptcy and or Voluntary Bankruptcy – once you are declared bankrupt, they’re managed to in the exact same way.

However, when it comes to Going Bankrupt for this, the stress and anxiety, torment and fear that accompanies this method is incredible. If you think you are more than likely to be made bankrupt by someone, get some help and act on that advice. Generally I’ve found it’s always more effective to know what you can and can’t do before you have a person bankrupt you. Once you are bankrupt, it’s usually far too late.

Voluntary Bankruptcy

Alternatively, when it comes to Going Bankrupt, sometimes there are moments that it is the best option. So you may have to ask yourself, ‘when should I consider voluntary Bankruptcy?’.

This question is not the very same for each person of course, but basically I find that one way you could work it out is to figure out just how long it will take you to pay every 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 Going Bankrupt.

Once, I had an 80 year old pensioner, who came 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 really 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 very seriously damaged for that period of time – and all of this will impact how you have to approach Going Bankrupt.

In many ways, the ease with which companies/credit providers can default your credit file is unjust. The punishment doesn’t seem to equate to the crime in my book. So if you actually have defaults on your credit report for 5 years, remember that bankruptcy is on your credit file for a total 7 years then its wiped off completely.

So if your credit rating is a big detail in trying to decide whether to take part in 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 mentioned the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the element most people are afraid of when they come to me to discuss their financial situation and Going Bankrupt. The other side of crime and punishment equation is bankruptcy, and in this specific country the provisions are very generous: you can go bankrupt owing millions of dollars and after 3 years it’s all over with no strings attached. As compared to countries like the United States, our bankruptcy laws are extremely generous.

I don’t pretend to know why that is but a few hundred years ago debtors went to prison. These days I suppose the government finds that 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 pay for a car accident if the car was not actually insured.

There is a lot more that can be said about doing this and Going Bankrupt in general but the objective of this blog was to help you decide between a few possible options. When getting some advice, always remember that there are always possibilities when it comes to Going Bankrupt in Australia, so do some investigation, and Good luck!

If you would like to learn more about just what to do, where to turn and what questions to ask about Going Bankrupt, then don’t hesitate to speak to Fresh Start Solutions Australia on 1300 818 575, or visit our website: freshstartsolutions.com.au/bankruptcy-Australia

Bankruptcy Advice in Australia – Will my income be changed if I go bankrupt?

Bankruptcy Advice Australia is a complicated process, and you need to make sure you get the right insight. And when it comes to your income being affected, the answer to the question is maybe. The first thing you have to know about going bankrupt is there is no limitation on how much you can earn. However, I will mention that your income is a serious consideration when working through when it comes to Bankruptcy Advice.

The very first thing you need to keep in mind about this area of Bankruptcy Advice 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 sum you earn per year. A dependant is someone who lives with you and earns less than $3,124 per year (regardless of their age).

You can look for a hardship variation that increases the threshold amount, if you have financial strains in Australia like medical, child care, serious travel to and from work, or a scenario where your spouse used to work but is no longer able to add to the household income.

Some of the intriguing parts of Bankruptcy Advice is that your employer will not be informed when you file for bankruptcy. Also, Child support is always looked at in bankruptcy, if you receive child support that is not factored in as income. If you pay child support this will be also thought about, for example if you give $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 many more issues covering income and what is or isn’t regarded as income – if you’re not sure, it’s best to get qualified advice. The reason you have to consider your income as a part of the Big 5 questions here is that bankruptcy is in some situations not an economically sensible option.

If one of your creditors is the ATO (for unpaid taxes), then your tax refund will be taken by the ATO whilst you are bankrupt to add toward your tax bill. If you don’t have a tax bill then you will keep your tax refund as long as that doesn’t take you over your threshold income caps.

If you believe that when it comes to Bankruptcy Advice, your situation is more intricate, then please get professional advice in Australia. I may sound like a broken record, but bear 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 far too late to change your mind.

If you intend to learn more about what to do, where to turn and what issues to ask about Bankruptcy Advice, then feel free to contact Fresh Start Solutions Australia on 1300 818 575, or explore our website: freshstartsolutions.com.au/bankruptcy-Australia