While bankruptcy is a necessity for some situations, it is a last resort and will come with some not so pleasant consequences. At Debt Savvy we do recommend that you do speak to us before you declare bankruptcy as there are various options that may be suitable before you make a serious decision like this.
What exactly is a budget?
The act of going bankrupt is a legal process that can be declared when an individual cannot pay their debts. Here, in Australia Bankruptcy is governed by the Bankruptcy Act 1966 and is regulated by the Australian Financial Security Authority.
When you declare bankruptcy you give up control of your finances and assets to a Trustee who will provide you protection from legal action being taken against you by a person or entity to which you owe money.
As we said, depending on your financial situation there may be an alternative to bankruptcy such as an informal arrangement, debt consolidation, a mortgage refinance, a debt agreement or a personal insolvency agreement and you should talk to us to find the best solution for you and provide you with professional advice on whether you actually do need to go bankrupt.
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Are there any debts that I will have to continue to pay if I declare bankruptcy?
Will my assets be protected when I go bankrupt?
What assets may be taken or sold if I go bankrupt?
Some assets if over certain thresholds may not be protected and have to be sold or taken if you declare bankruptcy. This is not limited to, but includes:
Property including houses; apartments; land; business and any other real property
Any motor vehicles which may not be exempt / over the set limit
Shares or other investments
Your tax refund
Proceeds from inheritance you may have received before or during your bankruptcy
Lotto winnings
Assets that you may have a joint share in with another individual
However before you declare bankruptcy, seek professional advice to ensure you are clear on what you will and won’t be able to retain.
Can bankruptcy affect my employment?
The simple answer is yes as it can affect your ability to hold certain licenses and working in various occupations. Your employer however is not normally notified of your bankruptcy unless you owe them money. You still will have to do a tax return
What else should I consider before going bankrupt?
Will bankruptcy affect my credit report?
Again, the simple answer is it will. Your name will be on the public record forever and will be on a commercial credit reference for 5 years even if your bankruptcy has been discharged. It is likely that creditors will also limit your ability to borrow from them.
As a result, you may find it hard to find a rental home, asked for bonds when connecting things like utilities and also find some banking institutions may not want to open accounts as result of the bankruptcy.
How long will my bankruptcy last?
It will last 3-years unless the trustee objects to you being discharged which could see it extended for up to 5 more years.
Again, before you decide on a course of action be sure to get in touch and talk with us here at Debt Savvy. We’ve had years of experience in this space and will ensure that you take the best course of action.
Before you decide on a course of action be sure to get in touch and talk with us here at Debt Savvy. We’ve had years of experience in this space and will ensure that you take the best course of action.
Debt Savvy Pty Ltd ABN: 34 628 338 885, is an Authorised Credit Representative (ACR: 531087) of Professional Debt Solutions Pty Ltd. ACL Number 395184.
Debt Savvy Pty Ltd is also an affiliate of Australia Wide Administrators Pty Ltd (ACR: 530852) – RDAA#1658 and Professional Debt Solutions Pty Ltd.
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