Bankruptcy....It's Not Worth It
If budgeting, negotiations, debt consolidation, or a debt agreement still fall short, then the last and least desirable option is bankruptcy.
To file for bankruptcy you must complete a debtor’s petition, statement of affairs and acknowledge having read the Prescribed Information Booklet before lodging documents with the Insolvency and Trustee Service Australia (ITSA). There is no filing fee and ITSA will generally accept the documents and deem you bankrupt on the same day.
The bankruptcy period lasts three years, but the trustee may lodge and objection and insist the period be extended to five years. From the date of bankruptcy, creditors cannot take further action to recover amounts owing but must instead lodge a claim in the bankrupt estate. If you incur further debts from the date of bankruptcy, you must repay them.
Secured creditors’ rights are maintained if you go bankrupt, so they can still repossess your assets if you are in default. From the date of bankruptcy, the trustee manages all of your assets so you are not allowed to sell any assets of value.
The trustee will investigate the bankruptcy and sell any assets of real value for the benefit of the creditors. This includes furniture, trade tools, means of transport. The trustee will also assess a bankrupt’s income annually to determine if income is sufficient to make income contributions
Going bankrupt has serious consequences. Once you have been bankrupt you cannot manage a corporation, require written permission to travel overseas and will have great difficulty accessing credit. It may also exclude you from working in certain occupations and otherwise hamper your earning potential and prospects.
Bankrupts cannot borrow more than $4083 without disclosing that they are bankrupt. The trustee must be advised of any name changes, address changes and must give permission prior to any overseas travel. Bankruptcy is recorded on credit files for 7 years, even if it has been discharged.
The stigma is not easily overcome, which is why bankruptcy should be treated as a last resort. All other measures should be exhausted first, so if you have tried budgeting and negotiation yourself, have a look at the debt agreement option. Ring us on 1300327828 for more info.
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