Bankruptcy Australia, What is the Deal with Debts?

Precisely what Debts are eliminated if I go Bankrupt?

The simple answer is that when it comes to Bankruptcy most debts are wiped, and I have also included a compendium below for you to look at.

But, put simply some of the exceptions are Centrelink Debts, Child Support, Court fines (like speeding fines) as well as any debts arising from uninsured Motor-vehicle claims and educational debts for instance, HECS or FEE-HELP. These debts are not wiped out when you file for bankruptcy.

What about Secured Debts?

A secured debt is a car loan or a home loan; it is a debt that has some genuine security affixed to it. So for example if you buy a new car for $40,000 dollars the security for this car is the actual car itself.

So, can my secured debts be removed if I file for bankruptcy?

Yes. If you have a car loan for $40,000 you can have that debt wiped out if you simply hand back the car. So the lesson is that you cannot have your cake and eat it too (so to speak), so yes all of your secured debts may be wiped but the asset needs to be sold or returned. This is just one aspect that, when it comes to Bankruptcy, it is important to get professional help - like that provided at Liquidation Service.

What about my Tax Debts with the ATO can they be cleared away If I go bankrupt?

Yes they can, both business and personal debts owing to the ATO can be erased with bankruptcy. If you have a business with any kind of debts get some advice because it is not always so self-explanatory. Feel free to call us right here at Liquidation Service if you have any questions on 1300 795 575. Or feel free to go to our website: www.liquidationservice.com.au

What about my business or Company debts?

In some cases when it concerns Bankruptcy we can really help you with your business debts, call us about this first. Remember bankruptcy applies to an individual not companies, trusts or businesses. Usually you may have to liquidate a company to deal with the debt that way. And when it comes to Bankruptcy, it can be a confusing area, so remember there are implications for a business owner such as insolvent trading. At Liquidation Service we specialise in business and personal debts so call us here at Liquidation Service if you have any questions about Bankruptcy on 1300 795 575. Or feel free to explore our website: www.liquidationservice.com.au

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be involved and confusing. A question we commonly get asked here at Liquidation Service is 'what happens to my super if I declare Bankruptcy'? The answer for most is simple, if your super is usually in a regulated fund or industry fund like Sunsuper or Host Plus then absolutely nothing happens; your super is 100 % safe when it involves Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, consider the expanding number of members of Self-Managed Super Funds ("SMSFs") lately; the ATO tells us it has increased Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it comes to Bankruptcy?

Remember Liquidation Service is not implying this post is the whole story, if you have any questions feel free to get in touch with us on 1300 795 575. Regardless if you call us or another person it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF in fact we highly recommend you look for both legal and financial advice before proceeding with any of the actions recommended in this article.

What is a Disqualified Person?

First and foremost, if you are thinking about Bankruptcy, you can not be a part of a SMSF. Why? Because if you are going up against bankruptcy, you will be identified as a 'disqualified person'. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem because usually most of the SMSFs are just 2 people, which means both of these members will need to also be the individual trustees. The job of trustee presents a lot of legal rules, and if you are in this role I would highly encourage you to get familiar with them all-- including the fact that you can not 'know or suspect' that one of you are bankrupt. So you can see how an individual bankruptcy can be quite destructive to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How much time do I have so as to restructure my SMSF Fund after I'm bankrupt?

So what takes effect if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will need to be restructured. This means that you will need to consider your extensive structure and ensure it is meeting the basic conditions, including having a new trustee that is not suffering from issues with Bankruptcy. The Australian Tax office will offer you a 6 month 'grace period' to get this done before you face penalties. And bear in mind, sometimes the most ideal plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale restructuring issues, there is a lot of paperwork to deal with too, and you need to be constantly keeping the ATO informed of what is happening. This means you have to let them know that you have a bankruptcy problem with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they must also notify ASIC of their resignation.

Through that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are unsure call Liquidation Service for some free advice on 1300 795 575.

What if I have a single member fund?

If you are a single member fund, then you will need to appoint a new director, and it will then be their obligation to oversee the sale and transfer of assets into a managed fund. If there are two or more members, than the bankrupt member will have to resign and the other member will remove the property and halve the proceeds. They would then need to decide if they choose to remain as a single member SMSF, or if they need to roll all of it into a managed fund. If both members are entering bankruptcy, then they would definitely need to sell all assets immediately and transfer the liquid assets to the managed fund.

From that you can notice how when it comes to Bankruptcy, even though one single member is facing issues, it can affect the very existence of an SMSF. If you are at the moment facing this issue yourself, or with a partner in a SMSF, please seek financial advice to make certain you are fulfilling the ATO requirements.

A simple solution ...

As I suggested earlier, a basic solution to your SMSF problem is to put your super back into a normal regulated managed fund before bankruptcy and save yourself all the problems outlined above. Bankruptcy is never easy, but receiving proper advice is the best 1st step. If you want to discuss your possibilities further, give us a call at Liquidation Service or visit our website: www.liquidationservice.com.au or just give us a call on 1300 795 575.

Bankruptcy in Australia - Will I lose my home if I go bankrupt?

Bankruptcy Australia is a confusing process, but I know from meeting with thousands facing the likelihood of bankruptcy over the years, that nothing troubles people more than the thought of losing the family house. Almost everybody is emotionally connected to their home - it's where the children have grown, it's where you appreciate life on a day to day basis.

Will you lose your home if you go bankrupt? The reply is a resounding maybe. (not very useful, I know) People generally think it's an inevitable consequence and a part of Bankruptcy, and because of this push themselves to the brink of insanity to not lose the family home. But when it comes to the whole process of Bankruptcy, a key strength of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you've agreed to pay back the debt you are in.

So how is it possible to keep my Australia house, you ask? It's easier if I explain the basic principle behind the Bankruptcy process as administered by the trustee, then you'll have a more clear picture.

The purpose of the bankruptcy trustee is to firstly abide by the regulation of the bankruptcy act 1966 (it's a very boring read about 600 pages if you are wondering).

Within that regulatory framework, the trustee is to help recover monies owed to your creditors, that is executed in a bunch of distinct ways but it mainly comes down to income and assets. The trustees role is to collect payments beyond your income threshold. The further role is to sell off any assets that can contribute to repaying your debts.

What this seems like is that yes the trustee will sell your house right? Not normally. The only reason the trustee will sell off any asset including your house is to get money to repay your debts. If there is no equity on your property then it's pointless to sell your home. This is happening much more since the GFC as house prices in many regions have been heading south so what you paid 4 years ago may not really reflect the price today.

A quick tip here if you have a house in Australia and are looking at Bankruptcy: get a specialist to help you through this process, there are loads of variables in these scenarios that have to be considered.

You might wonder, why would the bank want bankrupt clients? wouldn't they choose to sell your house and not take the risk? The bank that has nicely lent you the money for your house is creating good money every month in interest out of you, month in month out, provided you keep up to date with your payments then the bank wants you in there at all costs. Essentially however it's not the bank's call if the trustee decides that there is lots of equity in your house the trustee will force you and the bank to sell the house.

When you file for bankruptcy you are asked to put down the value of your house and the level you owe on the house. A tip if you are aiming to work out the value of your house: use a registered valuer as this will give you peace of mind, don't use your neighbours' gut feel suggestions or a real estate agents advice to arrive at this figure. When you get a valuer out to your house, ensure you tell the valuer to value the property for a quick sale, make certain you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to give two valuations: one for a quick sale and one for a well marketed non time sensitive sale. Nowadays that's not the case, but if you meet them and tell them you need to sell the house in the next 30 days you may sway the result. The idea is that you want a realistic sell now figure.

There are two main reasons this valuation system is critical to you: one you are going to have peace of mind ascertaining the market value of your house, and afterwards you can easily set up your equity position. The second thing is, your home may be worth a lot more than you thought. Get some suggestions before doing this. The amount of times I've met clients that have sold their family home of 20 years only to figure out I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another big consideration is ownership, often houses are purchased in joint names. Simply put a couple may be a house 50/50 using both incomes to make the payments. If one party declares bankruptcy and the other party doesn't, the equity is only factored on the 50 % of the property.

When it concerns Bankruptcy, this is just one of probably numerous scenarios that are likely when it comes down to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of the property in bankruptcy also. I have to repeat this but get some assistance on this area of Bankruptcy because it is very tricky and each and every case is different.

If you really want to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to speak to Liquidation Service on 1300 795 575, or visit our website: www.liquidationservice.com.au

Bankruptcy in Australia - Who exactly do I speak to?

Should I get in touch with my accountant about Bankruptcy?

The answer seems clear doesn't it: if anybody knows your financial circumstance well in Australia, It's going to be your accountant. However, the short answer is a definite No! It's not that your accountant doesn't have your best interests in mind when it comes to Bankruptcy, it's that his experience lie in helping you save you money at tax time, reducing your tax liability and lodging your BAS.

Most accounting degrees will spend very little to no time on bankruptcy, it's generally performed as a post graduate specialty program for those who intend to work in the field. Unless your accountant is an insolvency specialist, he wouldn't know that a lot about the effects of Bankruptcy, I can guarantee you insolvency specialists know much about tax returns or BAS in. If you do manage to find an insolvency accounting firm in Australia, they often tend to be large firms with very nice office spaces who charge accordingly.

Should I speak to my Solicitor about Bankruptcy?

No! You can talk with your solicitor in Australia but more than likely it won't do you much good. Solicitors are certainly good at doing things lawyers do, like helping you do your Will and buying your house and keeping you out of court if you're lucky. When it relates to Bankruptcy, the specialists in Australia have the tendency to have either a legal or accounting background, and the main reason for that is simply that you can't enrol in the post graduate study to become a qualified insolvency practitioner until you have a law or accounting degree.

Just as there are few insolvency accounting firms, there are very few insolvency legal practices in Australia, and yes if you locate one you will pay an ample price for their expertise.

Should I speak with a financial counsellor about Bankruptcy?

Yes! There are lots of financial counselling services to help you with this, they have no hidden agendas and they're a superb option for really helping you think through your situation when it comes to Bankruptcy. If you are stressing out constantly, not sleeping, not eating or over-eating and thinking about money pressures at all times, then get some help.

There are also charities around Australia like Lifeline that offer a wonderful service. They will be a sounding board if you just need someone to talk about with you what your options are. Don't let your financial problem destroy your life - in the end it's just money.

If you would like to learn more about what to do, where to turn and what issues to ask about Bankruptcy, then feel free to get in touch with Liquidation Service on 1300 795 575, or visit our website: www.liquidationservice.com.au.com.au.

Bankruptcy in Australia - Will I lose my business if I go bankrupt?

When people in Australia come to me trying to talk about Bankruptcy, they are constantly packed with questions. The internet has lots of information, but far too much of it is confusing or contradicts itself, so I make it my mission to try and make it clearer. One of the very most typical worries is 'Will I lose my business if I declare bankruptcy?' The concise answer is no. If you are a manager of a company any shape or size you can maintain your business if you want to. In Australia, businesses that are insolvent have a few options for instance liquidation, voluntary administration and so on. It's individuals who go bankrupt not companies.

Bankruptcy is a complex area so get some qualified advice on this if you have a business. Generally speaking, the financial obligations in a business and personal debts go together when a business owner goes bankrupt. There are a few crucial implications for directors of companies when it pertains to Bankruptcy in Australia: A bankrupt can not be a director of a company, so if you have a pty ltd company you will likely need to resign as a director after you're bankrupt.

A constraint that applies when you are actually bankrupt as a business owner is that you may be in your very own business as a sole trader only. Generally there are things you will want to make known as an aspect of that but essentially you can still run your business. For some business owners, bankruptcy affects their ability to run the business because of the licensing issues. Such as, if you run a building company, your license will be suspended once you're bankrupt and therefore you can no longer trade without that license, so make sure you are asking the best questions when it comes to licenses and Bankruptcy in Australia.

However if your business is not impacted directly by such issues, then you'll have to restructure the way you run your business. There are considerations when and if you go bankrupt as a business owner: you can not rack up heaps of debt in your company, then go bankrupt and after that open the doors the next day like nothing had happened. There are laws in place to stop what is called phoenix companies popping up out of the ashes of an old company.

Having said that, it's just a matter of talking with the best people about Bankruptcy. Here in this situation you may believe you need a liquidator for your company, and you could be right, but keep in mind that every liquidator is distinct and have their own motives. Liquidators earn money from your liquidation - heaps of money - so what advice do you think you will get?

When it comes to Bankruptcy, I believe that giving generic advice in this area is possibly risky as it can have very significant implications for directors and business owners. This is since it is one of those cases where what the right guidance for one business owner is the incorrect advice for the other. There are some basics however, that you may benefit from. There is no restriction to the size of the business you run while you are bankrupt. You can employ staff. You can constantly deal with your providers under certain conditions, the main one being you will need to meet the payment terms agreed upon.

So when it comes to Bankruptcy, don't get too stressed about what you can and can't do as a business owner, just get the appropriate advice ... If you want to learn more about what to do, exactly where to turn and what questions to ask about Bankruptcy, then feel free to speak with Liquidation Service on 1300 795 575, or visit our website:.liquidationservice.com.au.com.au.

Bankruptcy in Australia - does it matter if it is voluntary?

When it comes to Bankruptcy Australia, generally people aren't aware that there can be both voluntary, and involuntary bankruptcy - each have unique approaches and policies.

Involuntary bankruptcy arises when somebody you owe money to involves the court to declare you bankrupt. Usually when you get one of these types of notices, you have normally 21 days to pay all the debt. If you don't, then the creditor goes back to the court and asks the court to issue a sequestration order that declares you bankrupt. A trustee is appointed, and then you have 14 days to get the documentation in and afterwards you are bankrupt.

You can contest a bankruptcy notice by going to court immediately after the 21 days have expired and put your case forward, to avoid it going to the next level. Apart from the way you became bankrupt there is in reality no difference between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're conducted to in the very same way.

However, when it comes to Bankruptcy for this, the stress, torment and fear that accompanies this method is incredible. If you think you are in all likelihood to be made bankrupt by someone, get some advice and act on that advice. Generally I've found it's always better to know what you can and can't do before you have someone bankrupt you. Once you are bankrupt, it's usually too late.

Voluntary Bankruptcy

On the other hand, when it comes to Bankruptcy, sometimes there are moments that it is the most ideal option. So you may want to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the same for every person of course, but generally I find that one way you could work it out is to figure out how long it will take you to pay each of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may assist you make that decision, and help you to understand Bankruptcy.

Once, I had an 80 year old pensioner, who came to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the level she was paying off her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can help you think this through. If you move house and fail to remember to pay your $30 phone bill for 6 months more, it's very likely the telephone company will default your credit file. That default will sit on your file for 5 years, so for $30 you can have your credit file very seriously damaged for that period of time - and all of this will impact how you need to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is unfair. The punishment doesn't seem to equate to the crime in my book. So if you already have defaults on your credit report for 5 years, remember that bankruptcy is on your credit file for a total 7 years then its rubbed out completely.

So if your credit rating is a big factor in trying to decide whether to enter into a Debt Agreement or Personal Insolvency Agreement or Bankruptcy remember they will all sit on your credit file for a total of 7 years. The biggest contrast is that with a DA or PIA you pay back the money and still have it on your file for 7 years.

Bankruptcy

I have stated the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the part more people are afraid of when they come to me to talk about their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this country the provisions are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all finished with no strings attached. Compared with countries like the United States, our bankruptcy laws are extremely good.

I don't claim to know why that is but a few hundred years ago debtors went to prison. Nowadays I suppose the government assumes the sooner it can get you back on your feet working and paying tax, the better. It makes more sense than locking you up which in turn costs the taxpayer anyway.

Bankruptcy wipes every one of your debts including ATO debts except for a few things:.

·         Centrelink Debts, Court Fines like parking and speeding fines.

·         HECS or Fee Help loans.

·         Money to take care of a car accident if the car was not actually insured.

There is far more that can be said about this and Bankruptcy in general but the objective of this blog was to help you decide between a few available options. When getting some advice, keep in mind that there are always alternatives when it involves Bankruptcy in Australia, so do some homework, and Good luck!

If you would like to learn more about precisely what to do, where to turn and what questions to ask about Bankruptcy, then feel free to speak with Liquidation Service on 1300 795 575, or visit our website:liquidationservice.com.au.com.au.

Bankruptcy in Australia - Will my income be influenced if I go bankrupt?

Bankruptcy Australia is a intricate process, and you should ensure you get the right suggestions. And when it comes to your income being affected, the answer to the question is maybe. The first thing you need to know about going bankrupt is there is no rule on how much you can earn. However, I will point out that your income is a considerable consideration when working through when it comes to Bankruptcy.

The very first thing you need to understand about this area of Bankruptcy is just how much you can earn before you start paying back money to your creditors via your trustee (see table below).

Net income is the pre-tax/ in the hand amount of money you earn each year. A dependant is someone who lives with you and earns less than $3,124 per year (regardless of their age).

You can request a hardship variation that increases the threshold amount, if you have financial strains in Australia such as medical, child care, considerable travel to and from work, or a situation where your spouse used to work but is no longer able to add to the household income.

Some of the informative parts of Bankruptcy is that your employer will not be informed when you file for bankruptcy. Also, Child support is always looked at in bankruptcy, if you receive child support that is not factored in as income. If you pay child support this will be also considered, for example if you pay $5,000 child support each year and you have no dependents living with you then your modified net income limit will be $55,332.10.

There are more issues covering income and what is or isn't thought of as income - if you're unsure, it's a good idea to get specialist advice. The reason you should consider your income as a part of the Big 5 questions here is that bankruptcy is in some cases not an economically viable option.

If one of your creditors is the ATO (for unpaid taxes), then your tax refund will be taken by the ATO whilst you are bankrupt to add toward your tax bill. If you don't have a tax bill then you will keep your tax refund provided that doesn't take you over your threshold income limitations.

If you think when it comes to Bankruptcy, your issue is more complicated, then just get professional advice in Australia. I may seem like a broken record, but bear in mind that it's always a smart idea to overcome these options prior to declaring bankruptcy, since once you have filed the paperwork it's far too late to change your mind.

If you intend to learn more about what to do, where to turn and what problems to ask about Bankruptcy, then don't hesitate to contact Liquidation Service on 1300 795 575, or go to our website: liquidationservice.com.au.com.au.