If you are in debt and are considering bankruptcy think before you act. Bankruptcy is a last resort and has serious consequences. There are various options to deal with unmanageable debts. Before you make any decision or take any steps talk to Fox Symes. There are alternatives.
Do I Need to Become Bankrupt?
Bankruptcy may seem an easy and attractive option if you want to deal quickly with your creditors. However it has consequences which you should know about before you consider taking this step. Find out from Fox Symes the other options which may be used to address you financial situation. You may not have to go bankrupt.
How do I Become a Bankrupt?
When you feel unable to pay your debts and you cannot come to a satisfactory arrangement with your creditors then bankruptcy may be your best option. You may voluntarily lodge a debtor's petition to become bankrupt.
A creditor may also bankrupt you. Once you have spoken with Fox Symes and, after reviewing your options, you have decided that voluntary bankruptcy is your best option, Fox Symes will assist you in taking the necessary steps to become bankrupt. You do need to be fully informed because the consequences of bankruptcy are serious.
Is there a minimum amount I need to owe before I can go Bankrupt?
No. You can become bankrupt voluntarily owing any amount. A creditor however cannot make you bankrupt unless the debt you owe is $5,000 or more.
Who would handle my Bankruptcy?
AFSA will administer your estate if no registered trustee has provided a consent to act. Fox Symes has a registered trustee and that trustee may consent to act on your behalf.
What happens when I become a Bankrupt?
Once you are a bankrupt your unsecured creditors will cease to contact you. If you want this to happen then you must list all your unsecured creditors in your Statement of Affairs. This will also include debts which you have taken out with another person, that is joint debts, and even money you may owe to your family and friends.
Most legal action which an unsecured creditor had taken against you must stop once you file for bankruptcy. This also applies to a garnishee from you income or bank account or any recovery action by a sheriff or bailiff.
If any of your unsecured creditors continue to contact you then you should notify your trustee. They will contact the creditor. There are some debts which you must continue to pay during bankruptcy and these include:
- Penalties and fines imposed by the court
- Unliquidated damages from accidents e.g. car accidents may be an exemption
- Student assistance/supplement loans and HELP debts
Of course you must continue to pay certain debts such as your utility bills and any additional debts you incur after your bankruptcy commences.
What happens to my assets when I become a Bankrupt?
When you become a bankrupt some of your assets can be retained because they are protected property and some may be recovered by your trustee and sold.
An asset is defined as anything of value you own when you become a bankrupt and anything you buy or receive before the end of your bankruptcy. When you become a bankrupt what you may keep includes:
- Most of your ordinary household or personal items
- Tools of trade used to earn an income up to a set limit
- Vehicles (e.g. cars or motorbikes) up to a set limit
- Most funds in a complying superannuation fund
- Life insurance policies
- Compensation for a personal injury
- Centrelink payments are also protected
Before you file for bankruptcy make sure you thoroughly investigate exactly what assets are protected and those which are not.
Will any of my assets be sold?
Some assets are protected under bankruptcy and those, which you can generally keep, are listed above. However there are other assets which your trustees can recover. Examples of these assets include:
- Houses; apartments; land; business and any other real property
- Motor vehicles which are not exempt
- Shares and other investments
- Any tax refund for income earned before you became a bankrupt
- Proceeds from a deceased estate where the person died before or during your bankruptcy
- And lottery winnings
Any asset you own with another person may also be sold by your trustee.
What if my house is mortgaged?
Your trustee has to deal with any equity or interest you have in a property for the benefit of your creditors. This may mean that the property has to be sold. If the property is jointly owned the trustee may consider selling his interest in your property to a non-bankrupt joint owner. Alternatively the joint owner provided they are not bankrupt may make an offer to purchase the trustees interest in the property.
What if I have a car?
Once you become bankrupt, a vehicle which is used primarily as a means of transport (eg. car or motor bike), where your interest in the vehicle is less than a prescribed amount (indexed), is protected and can be retained by you. Where the interest in vehicle is valued at more than the prescribed amount the trustee is required to sell, and give back to you the value of the prescribed amount and retain the balance for your creditors.
What happens if someone else also signed the loan agreement? Will they have to pay if I declare myself Bankrupt?
Generally, yes. They will still have a liability for the total amount outstanding on all debts incurred in joint names.
What happens if someone has guaranteed some of my debts?
Bankruptcy does not affect the rights of a creditor to claim under a guarantee. The creditor is entitled to recover payment from the guarantor. Once payment has been made, the guarantor steps in the shoes of the creditor and is able to lodge a claim in your bankruptcy for the debt paid.
What about debts incurred just before Bankruptcy?
If you are already insolvent, that is you cannot pay your debts, you should not incur further credit because if you become bankrupt it may be an offence under the Bankruptcy Act, and you may be prosecuted.
What happens to a debt I forgot about at the time of becoming Bankrupt?
If you forgot about a debt and remember it later, you should contact your trustee as soon as possible so that it may be added to your list of creditors. Failure to disclose debts could extend your bankruptcy to 5 years.
What about debts incurred after Bankruptcy?
If you become bankrupt you will be responsible for any debts incurred by you after bankruptcy.
Bankruptcy is a last resort and has serious consequences.
Fox Symes is the largest provider of debt solutions to individuals and businesses in Australia. Fox Symes helps over 100,000 Australians each year resolve their debt and take financial control.
If you are in debt and want to know more about the solutions available to you contact us on 1300 098 127 or fill out the short contact form.