To file bankruptcy in Australia is to legally declare that you are unable to pay your debts.
This article reviews some facts about bankruptcy in Australia and explores the impacts of bankruptcy.
1.
Voluntary bankruptcy In Australia you may choose to declare bankruptcy or your creditors may petition to have you declared bankrupt.
To file for bankruptcy in Australia you are not required to have a minimum amount of debt.
The first step is to complete a Debtor's Petition and Statement of Affairs.
These forms are sent to the Insolvency and Trustee Service Australia (ITSA).
This agency processes all bankruptcy cases in Australia.
On this form you must fully disclose all your personal bankruptcy information, including all private and commercial debt.
If you fail to do this you may face penalties up to and including imprisonment.
2.
What happens to my debts when I become bankrupt? Once you are declared bankrupt you no longer have to pay the provable debts on your bankruptcy petition.
This means that you do not have to repay unsecured debt such as credit cards and personal loans.
However, if you owe secured debt such as a mortgage, the creditor may force you to sell the item securing the debt and then pay the money to them.
There are many debts not discharged by bankruptcy, these include: • Fines • Debt from fraud • Maintenance payments • Child support • Dept.
of Social Security debts • Higher Education Contribution Scheme debts occurring before bankruptcy • Student Supplement Loans 3.
Who handles my bankruptcy? The ITSA or a Private Trustee will be appointed to oversee your bankruptcy.
ITSA or the Private Trustee will sell your divisible assets and require you to contribute regular portions of your income.
A review of your financial history will be conducted for any assets not declared in your bankruptcy petition.
4.
What happens to my assets? Upon filing bankruptcy your divisible assets are any possessions with a sale value.
This generally includes such assets as cars, antiques, land, stocks and others.
Filing for bankruptcy in Australia requires that you relinquish control over the vast majority of your assets.
5.
What happens to my house? If you have interest of any kind in a home that interest reverts to the Trustee's control.
This may result in your house being sold and the proceeds being divided among your creditors.
6.
What happens to my car? The Trustee will determine if you may retain ownership of your car.
As a general rule you will be permitted to keep a car if it is your primary transportation and is not valued over a prescribed amount.
7.
What happens to my job? Filing bankruptcy is not grounds for losing your job.
In fact your employer is not informed of your personal bankruptcy information unless they are also a creditor of yours.
8.
How long will I remain bankrupt? If you file for bankruptcy in Australia you will remain bankrupt for three years from the date the Statement of Affairs was filed.
The Trustee of your bankruptcy may extend this time to five or eight years if you do not complete your prescribed duties.
9.
What are my obligations during bankruptcy? After filing for bankruptcy in Australia you must let the Trustee know of any name or address change.
You must also request written permission to travel, and you may have to give your passport to the Trustee.
If you do not comply fully with the Trustee's requests you risk having your bankruptcy extended by two to five years.
10.
Can my bankruptcy be annulled during the three years of bankruptcy? In accordance with the Bankruptcy Act of 1966 you may offer composition or make an arrangement to settle debts with your creditors.
The money offered must be previously exempt according to your personal bankruptcy information.
The Trustee will hold a meeting of your creditors.
If 75% or more in value and a majority in number of your creditors ratify the offer your bankruptcy is annulled.
The information in this article is correct as at the date of writing and should be relied upon as a guide only.
Always seek professional advice before taking any further action.
This article reviews some facts about bankruptcy in Australia and explores the impacts of bankruptcy.
1.
Voluntary bankruptcy In Australia you may choose to declare bankruptcy or your creditors may petition to have you declared bankrupt.
To file for bankruptcy in Australia you are not required to have a minimum amount of debt.
The first step is to complete a Debtor's Petition and Statement of Affairs.
These forms are sent to the Insolvency and Trustee Service Australia (ITSA).
This agency processes all bankruptcy cases in Australia.
On this form you must fully disclose all your personal bankruptcy information, including all private and commercial debt.
If you fail to do this you may face penalties up to and including imprisonment.
2.
What happens to my debts when I become bankrupt? Once you are declared bankrupt you no longer have to pay the provable debts on your bankruptcy petition.
This means that you do not have to repay unsecured debt such as credit cards and personal loans.
However, if you owe secured debt such as a mortgage, the creditor may force you to sell the item securing the debt and then pay the money to them.
There are many debts not discharged by bankruptcy, these include: • Fines • Debt from fraud • Maintenance payments • Child support • Dept.
of Social Security debts • Higher Education Contribution Scheme debts occurring before bankruptcy • Student Supplement Loans 3.
Who handles my bankruptcy? The ITSA or a Private Trustee will be appointed to oversee your bankruptcy.
ITSA or the Private Trustee will sell your divisible assets and require you to contribute regular portions of your income.
A review of your financial history will be conducted for any assets not declared in your bankruptcy petition.
4.
What happens to my assets? Upon filing bankruptcy your divisible assets are any possessions with a sale value.
This generally includes such assets as cars, antiques, land, stocks and others.
Filing for bankruptcy in Australia requires that you relinquish control over the vast majority of your assets.
5.
What happens to my house? If you have interest of any kind in a home that interest reverts to the Trustee's control.
This may result in your house being sold and the proceeds being divided among your creditors.
6.
What happens to my car? The Trustee will determine if you may retain ownership of your car.
As a general rule you will be permitted to keep a car if it is your primary transportation and is not valued over a prescribed amount.
7.
What happens to my job? Filing bankruptcy is not grounds for losing your job.
In fact your employer is not informed of your personal bankruptcy information unless they are also a creditor of yours.
8.
How long will I remain bankrupt? If you file for bankruptcy in Australia you will remain bankrupt for three years from the date the Statement of Affairs was filed.
The Trustee of your bankruptcy may extend this time to five or eight years if you do not complete your prescribed duties.
9.
What are my obligations during bankruptcy? After filing for bankruptcy in Australia you must let the Trustee know of any name or address change.
You must also request written permission to travel, and you may have to give your passport to the Trustee.
If you do not comply fully with the Trustee's requests you risk having your bankruptcy extended by two to five years.
10.
Can my bankruptcy be annulled during the three years of bankruptcy? In accordance with the Bankruptcy Act of 1966 you may offer composition or make an arrangement to settle debts with your creditors.
The money offered must be previously exempt according to your personal bankruptcy information.
The Trustee will hold a meeting of your creditors.
If 75% or more in value and a majority in number of your creditors ratify the offer your bankruptcy is annulled.
The information in this article is correct as at the date of writing and should be relied upon as a guide only.
Always seek professional advice before taking any further action.