Is it time to start over?

At Debt Negotiators, we are committed to serving all our clients with their best financial interests in mind.

Generally speaking, filing for bankruptcy is a last resort, but sometimes it is the best solution. If you’re struggling to repay your outstanding financial obligations and are falling further into debt, Debt Negotiators will work with you to assess your circumstances and arrive at the best debt solution suitable for you.

Bankruptcy Solutions

If you have exhausted all potential avenues such as Debt Consolidation, Debt Agreements, Personal Insolvency and other repayment strategies to help with your bad debt situation, and still don’t think you can repay your debts, you can apply for bankruptcy as a last resort.

What is bankruptcy and who is eligible?

Bankruptcy, which can also be called voluntary bankruptcy or a state of personal insolvency, is the process in which you legally declare you cannot pay your debts. There are no restrictions on the amount of debt, and there is no fee for applying for bankruptcy. However, depending on your financial situation, there may be a fee for completing the Bankruptcy documentation and administering your Bankruptcy.

To be eligible for bankruptcy in Australia, you must

  • prove you are unable to pay your debts when they’re due
  • have a business or residential connection in Australia, or be living in Australia.

It’s important to note there are other options available to you under the Bankruptcy Act of 1966. You should only enter into voluntary bankruptcy as a last resort, and it should only be considered if you have exhausted all other avenues of debt relief.

Declaring bankruptcy will have long term consequences. Seek out free financial advice to help you weigh up all your options, and decide whether bankruptcy is the right solution for you.

How does bankruptcy work in Australia?

There are several ways in which bankruptcy can be declared in Australia. You can enter into voluntary bankruptcy through a debtor’s petition, or your creditors may apply to bankrupt you through a court, which is called a creditor’s petition.

Once you have been declared bankrupt, you can nominate a trustee or the Australian Financial Security Authority (AFSA) will appoint one for you to manage your finances.

You will be classified as bankrupt for three years, and your bankruptcy will be publicly registered on the NPII, National Personal Insolvency List.

What happens when you declare bankruptcy?

When you declare bankruptcy, you will be released from most of your debts and your creditors will no longer be knocking on your door.

You will still be required to make your repayments on your secured debts such as your car or home loan. If you cannot make these payments, your house or car will most likely be repossessed by the bank.

You will still have to pay your child support alimony payments, as your bankruptcy status will not affect these.

How much debt do you have to have to declare bankruptcy in Australia?

There is no minimum debt amount required in order for you to declare bankruptcy. However, if you have more than $10,000 in debt with a particular creditor, and the creditor has unsuccessfully tried to recover the debts you owe them, they can force you into bankruptcy.

The types of debt that you can include in your bankruptcy include:

  • Credit card debt
  • Utilities
  • Medical bills
  • Unsecured personal loans
  • Payday loans.

When is bankruptcy a good idea?

Filing for bankruptcy should be your last resort. If you:

  • can show you are unable to pay your debts when they are due
  • have exhausted all other options for debt relief
  • and are present in Australia or have a business or residential connection with Australia, then filing for bankruptcy is one possible solution.

Is bankruptcy the right solution for me?

Whether declaring bankruptcy is right for you is entirely dependent on your circumstances. Bankruptcy should only ever be your last option once all other debt relief solutions have been explored.

Get in touch with us today for a free debt assessment to review your options and identify the best debt relief solution for you.

What are the benefits of bankruptcy?

Bankruptcy can offer you an opportunity to start again with a clean slate. Filing for bankruptcy will stop creditor collection activities and harassment as it will wipe out most of your unsecured debts such as:

  • Credit and store cards
  • Unsecured personal loans
  • Utility and medical bills.

You’ll also be able to keep a number of your personal possessions, including household goods that are of a reasonable value. However, it isn’t a financial cure-all. It doesn’t cover secured debts such as your mortgage, car loans, furniture or equipment rentals or similar.

You will likely lose possession of your major assets such as:

  • Real estate
  • Antiques and artworks
  • Luxury electronic items
  • Some jewellery
  • Inheritance, tax refund or winnings
  • Money in your bank account which is in excess of $1,000.

What are the consequences of filing for bankruptcy?

Many people who are in debt believe that filing for Bankruptcy is the only viable solution to their inability to repay their debts; however, this is not the case. Bankruptcy should be considered as a last resort.

Declaring Bankruptcy has a number of far-reaching consequences that can be detrimental to your financial future.

Debt Negotiators will actively work with you to thoroughly investigate all other avenues to financial freedom before considering filing for bankruptcy.

Filing for bankruptcy may:

  • lead to the sale of your assets such as your jewellery, house, car or furniture as you may be forced into the sale of assets to help cover outstanding debts
  • lead to a requirement to make contributions, depending upon the level of your income
  • have a potential impact on your current or future employment
  • affect your ability to obtain future finance and credit as it may be listed with Credit Reporting Agencies
  • lead to restricted permission to travel overseas for three years.

Are bankruptcy filings public records?

Yes. Your time spent in bankruptcy will be publicly listed on the National Personal  Insolvency Index (NPII) indefinitely.

How does bankruptcy affect your credit rating?

Bankruptcy will negatively affect your credit rating. It will appear on your credit report for five years from the date it starts or, or two years from the date it ends (whichever is the latest).

While your credit record shows you are bankrupt, you will struggle to obtain loans or credit.

How long does bankruptcy stay on your credit file in Australia?

Bankruptcy will be listed on your credit report for either two years from the day your bankruptcy ends, or for five years from the date you became bankrupt, depending on which of these is the latest.

What are the alternative solutions to filing for bankruptcy?

While many people believe that bankruptcy is the only solution when you are drowning in debt, that is not the case. Bankruptcy is, in truth, your last resort. There are many alternative debt relief solutions available to you that may mean you can avoid declaring bankruptcy.

At Debt Negotiators, we work closely with you to find the best debt solution for you.

Even if you are falling badly behind on your repayments, we are often able to negotiate a debt solution that can help you get back in control of your finances such as:

What types of debt are covered by bankruptcy?

Bankruptcy usually only affects unsecured debts, this means debts that are not tied to an asset such as your:

  • credit and store cards
  • utility bills, for example, electricity, gas, water and lights, phone and internet
  • medical, legal and accounting fees
  • overdrawn bank accounts
  • unpaid rent
  • unsecured personal or payday loans.

Any unsecured debts overseas will be covered in your Australian bankruptcy, provided you stay in Australia. Your overseas debtors will be able to pursue you if you move to a country where you have debt.

You must remember to continue paying your utility bills even after you are declared bankrupt.

Bankruptcy does not cover:

  • secured debts such as mortgages or car loans
  • government debts such as
    • child support
    • Centrelink debts
    • HECS-HELP debts
    • court fines.

When filing for bankruptcy, what can I keep?

You will be able to keep a number of your personal possessions, including household goods that are of a reasonable value, as well as money in your bank accounts below $1,000.

How does bankruptcy affect my partner?

In most cases, you will file as an individual. In this instance, your partner’s credit rating will not be affected. However, any joint assets could be affected.

Although your bankruptcy won’t directly impact your partner, it will have what is called ‘satellite’ effects by placing restrictions or by simply being a hindrance.

  • Your joint accounts, including any joint investment accounts, joint insurance policies or joint loans such as home loans or a rental lease in both your names could be impacted. If you are declared bankrupt, your partner or spouse, as a co-borrower, will become legally responsible for the full amount and not just their ‘half’.
  • If your partner or spouse applies for a loan or rental lease, their eligibility will not be impacted. However, they may find it difficult to obtain credit at the same address you have filed for bankruptcy under.
  • Any claims on a co-owned rental property could become tricky and a court will need to decide on a case-by-case basis regarding the impact of your bankruptcy on that property.
  • If you run a business together, things could get tricky as you cannot have any role in managing the company or formally be a director unless the court authorises it. You may also be required to tell anyone you deal with in your business that you’ve declared bankruptcy.
  • Family holidays will become a challenge as you cannot take a holiday or travel overseas without the express written consent of your trustee. You may have to surrender your passport for the duration you are bankrupt.

Can you apply for bankruptcy without a lawyer?

Yes, you can file for bankruptcy without a lawyer. Simply follow the steps for filing for bankruptcy in Australia (below).

Once you have been declared bankrupt, you will be assigned a trustee, who will manage your assets and finances until your bankruptcy is discharged.

You may, however, find it worthwhile to get professional advice and support with your bankruptcy application.

How do I file for bankruptcy in Australia?

If you’ve tried all other avenues and decide that filing for bankruptcy is the right solution for you, you’ll need to:

  1. Complete a Debtor’s Petition and Statement of Affairs
    This document:

    • will require the name, address and amount you owe each of your creditors
    • must show all the personal and business debts you are liable for
    • must include the full details of your income
    • must include all the details of your personal property including your house, your car(s), bank accounts, and shares
    • must indicate any money owed to you.
  2. Deliver all forms and documents to the Australian Financial Security Authority (AFSA)
    You become bankrupt when the forms are accepted by the Official Receiver in Bankruptcy. The standard length of bankruptcy is three years. however, this can be increased to eight years in some instances.
  3. Your bankruptcy trustee will inform you of the reference number to use in any future correspondence.
    Your obligations, once you’ve been declared bankrupt, are to:

    • Keep your trustee immediately informed of any money or prizes you win
    • Let your trustee know immediately if you become the beneficiary of a deceased estate
    • Tell your trustee immediately if you become the owner of any new assets such as a house or car
    • If asked to, surrender your passport to your trustee
    • Assist any creditors who hold valid security over any property to take action to recover it.

    You will not be able to act as a manager or director of a company during your bankruptcy unless otherwise approved by the court. You will still need to pay any debts incurred after the date of your bankruptcy and will still be liable for these new debts.

How much does it cost to file for bankruptcy?

The Australian Financial and Security Association (AFSA) does not charge a fee to apply for bankruptcy in Australia.

However, depending on your financial situation there may be a fee for completing the Bankruptcy documentation and administering your Bankruptcy.

How long does bankruptcy last?

There are three potential phases for bankruptcy and each one has its own implications on time.

  1. Undischarged Bankruptcy
    Undischarged bankruptcy is the phase we usually refer to when discussing bankruptcy and is the most restrictive.  This phase of bankruptcy will last for three years and a day after the day you were made bankrupt.
  2. Discharged Bankruptcy
    When your three years and a day of undischarged bankruptcy ends, you are usually discharged. As long as you have managed to make certain improvements to your finances, and you are managing to make any payments owed to creditors, your bankruptcy restrictions will be lifted. You will now be able to apply for credit in the normal way. However, you will still remain registered as being bankrupt for a further two years (or longer in some cases).
  3. Extended Bankruptcy
    In the case that you have been unable to meet your bankruptcy conditions, an extended bankruptcy may be applied for. Extended bankruptcy is usually applied for in cases where you need more time to get your finances under control or you still need protection for legal action. Extensions may apply if you do not comply with the terms of your bankruptcy.

When is bankruptcy discharged?

To have your bankruptcy discharged means you are released from being personally liable for the debts owed to your creditors included in your bankruptcy.

It signals the start of your ‘fresh start’. Your discharge date will depend on your type of bankruptcy:

  • Voluntary bankruptcy through a Debtor’s Petition usually ends, or is discharged, three years and one day after the acceptance of your ‘Statement of Affairs’.
  • In involuntary bankruptcy, called a Creditors Petition, the trustee appointed will send you the Statement of Affairs to complete and return. In this case, the trustee will lodge the Statement of Affairs. The bankruptcy discharge date is three years and one day after the Statement of Affairs has been lodged and accepted. It’s therefore in your best interest to get this completed as soon as possible to get the bankruptcy period started.

Your discharge from bankruptcy will usually occur automatically if you have met your obligations under the Bankruptcy Act unless your trustee has lodged an objection.

Once your bankruptcy has been discharged, you’ll be released from most of the provisions of the Bankruptcy Act. However, you may still need to assist the trustee.

How can Debt Negotiators help with bankruptcy solutions?

At Debt Negotiators, we understand the consequences of filing for bankruptcy in Australia. We will investigate all other avenues of debt solutions before we recommend this.

However, if we have exhausted all other viable solutions for your debt repayment and management, you may have to file for Bankruptcy. Debt Negotiators can advise you throughout the process of filing for bankruptcy and will help you to rectify your financial situation.

Our expert consultants are here to offer expert advice, guidance and support for those suffering from financial hardship and are dedicated to rectifying your situation by other means.

Debt Negotiators offers you:

  • Independent professional consultation

  • Support throughout Australia

  • Individual solutions based on your financial situation.

Talk to Us About Bankruptcy Solutions

Talk to us today for more information on Bankruptcy and Debt Negotiators’ financial services, or to book a free financial assessment.

Our qualified and friendly team are available Monday to Friday (AEST), no matter where you live in Australia. We’re here to help you identify the best debt solutions for your current financial circumstances, whether you have bad credit or not.

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