Managing Financial Difficulties
Generally, most people feel ashame to declare bankruptcy, delay the process to relief themselves from the financial destress and get a fresh start. Dealing with the unmangeable debt, declaring bankruptcy would be one of the options.
Bankruptcy is a legal process where you are declared unable to pay your debts. It may release you from most of the consumer debts, however, your future borrowing capacity will be affected.
After you apply bankruptcy, a trustee will be appointed to manage your bankruptcy, it may be a situation that the trustee would sell your assets (for example, house, vehicle, cash in bank account, household belongings etc) for payment of debts. If the value of the vehicle is below the set amount and it is your primary means of transport, you may keep your vehicle. If your vehicle is above the set amount, your trustee may sell it to help paying your debts. If the sale amount is unable to pay all the outstanding debts, the outstanding amount would be covered by the bankruptcy.
If your income during bankruptcy is more than the set amount, half or your income earn above the set amount will have to pay to your trustee as a compulsory payment. You will not be able to keep your directorship in a company or using your full name to run your trading as a sole trader.
Voluntary bankruptcy is one of the options to manage the debts, you may enter into a personal insolvency agreement or debt agreements with your creditors. You may present to the Official Receiver a declaration in the approved form of his/her intention to present a debtor’s petition pursuant to s54A Bankruptcy Act 1966. When the Official Receiver accepts and endorses the declaration, the Official Receiver will notify each of the creditors disclosed in the debtor’s statement of affairs. It serves a function to stop your creditor to enforce a judgment for a period of 21 days ( s54C of the Act)
A debtor may present to the Official Receiver a petition in the approved from with a statement of affairs against himself or herself under s55 of the Act. The Official Receiver will refer the petition to the Court for a direction. If the petition is accepted and endorsed, the debtor will become a bankrupt.
A creditor’s petition commences with issuing a bankruptcy notice when a final judgment or final order (or 2 or more) that is of the kind described in paragraph 40(1)(g) and is for a total amount at least $10,000.
How long does it last?
Bankruptcy generally will last 3 years and 1 day from the day you file the bankruptcy form.