When you can no longer appease creditors with any other proposals to pay off your debt, you might have to declare yourself bankrupt. But where do you even start? Do you need help in declaring bankruptcy in Australia?
First, you have to understand what bankruptcy is and all its implications before you even begin the process of going through it. Bankruptcy happens when a debtor (you) no longer has the financial capacity to pay off his or her debts to a creditor.
Declaring bankruptcy in Australia is a rather straightforward process and once you have done so, you are legally absolved from paying your debts, however some exceptions apply to this and you should speak to us about your personal situation.
Should You Declare?
The first thing you have to realise is that claiming bankruptcy in Australia requires strict adherence to the procedures set in place by the authorities involved. This process will require you to disclose specific information to your trustee. There are many cases that will drive an individual in declaring bankruptcy in Australia and there are certain restrictions, concerns, and aspects of bankruptcy you need to understand before claiming for it.
Declaring bankruptcy involves having a trustee appointed to you (someone to look after your bankruptcy process). This trustee will take control of all your debts as well as some of your assets (if required). These assets may then be sold and the proceeds used to pay down your debts. Be sure to contact us about this as there are certain assets that you can retain through bankruptcy.
Bankruptcy has earned a bad reputation for being the worst thing that could ever happen to someone. Because of this stigma, alot of people avoid the process of going through it for as long as they can. This is often counter-productive and bankruptcy may in fact be the best option to save yourself or your business.
How to Declare Bankruptcy in Australia?
The first step in declaring bankruptcy in Australia is to file a petition. This action can be made by you personally or by someone you owe money to. If it is done by you personally then it is called a debtors petition, however if it is done by someone you owe money to it is called a Creditors petition and is lodged by order of the Federal Court.
If you want to enter into bankruptcy voluntarily, you have to lodge an application with the Australian Financial Security Authority (AFSA) or with a registered trustee. Before doing so, it is highly recommended to talk to a financial counselor that could guide you through the whole process. This will make it more convenient for you and you will experience less hindrances along the way.
Requirements for Declaring Bankruptcy in Australia
There are only three forms that you need to complete. You can get hold of these forms from the AFSA office or you may also ask from your registered trustee. Without these documents, you cannot proceed to the next stage of the bankruptcy. These are:
- Debtor’s Petition which is where you indicate what you have to claim,
- Statement of Affairs where you cite the causes of your bankruptcy,
- Acknowledgments whereby a declaration proves that you have read and received all of the prescribed information and have a full understanding of everything.
Remember to take caution when it comes to the completion of these forms. It may seem easy and straightforward, but one misstep could result in your bankruptcy being declined and if the incorrect information is provided your bankruptcy may be extended from three years to up to eight years. Work hand in hand with your trustee or with a bankruptcy advisor to learn more about this.
Consequences of Declaring Bankruptcy
The other important things you should understand when you are thinking about declaring personally insolvent (Or bankrupt) are the consequences that come with it. It is important that you speak with a professional to determine what impact Bankruptcy may have upon you.
Amongst other things, declaring bankruptcy in Australia may affect your ability to obtain credit, may affect your employment and will appear on the NPII (National Personal Insolvency Index). Be sure you understand what affect this may have on you.
Consult With Us Today!
Act quickly! Get advice from financial counselors like My Bankruptcy. We provide debt management solutions to individuals and businesses in many states across Australia. If you need help in declaring bankruptcy in Australia or personal insolvency Australia, our team will work closely with you to get you out of trouble and give you a fresh start.
Call us at 1300 255 059 or send a message to steve@mybankruptcy.net.au. Book a consultation today!