Looking for bankruptcy advice on whether or not to declare? Before you do anything, you need to understand bankruptcy is a last resort to bad debt and there are a number of solutions available to help you. The best thing to do if you are considering bankruptcy is to seek bankruptcy advice from professionals, like Debt Rescue to make sure this life changing decision is right for you.
Have you fallen behind on your loan repayments? Are you being hounded by creditors? Are you about to lose your family home? If you have answered yes to any of these questions, there is a strong possibility you have also considered bankruptcy. The following article is full of bankruptcy advice, tips and information to help you decide whether this debt relief solution is the right move for you. While bankruptcy can provide relief and freedom for some, it can cause stress and heartache for others. To decide whether bankruptcy is right for you, read the following bankruptcy advice and take it all on board. Remember, there are other debt relief solutions you can try before you declare bankruptcy.
Bankruptcy in Australia
In Australia, Bankruptcy is seen as the last resort for anyone experiencing financial distress. People considering declaring bankruptcy are urged to seek bankruptcy advice in order to be absolutely certain it is right for them. This is for a very good reason. The state of Bankruptcy enforces many restrictions and obligations on a person and a bankrupt must live a very different lifestyle.
However for someone experiencing extreme financial distress, who owns very few assets or is at a certain stage in their life, bankruptcy could offer a sturdy base from which to rebuild your finances and ‘start again’.
The limitations of bankruptcy
Put simply, declaring bankruptcy is declaring to your creditors you don’t have enough money or assets available to repay your debt and your situation won’t change any time soon. Once you have declared Bankruptcy, your debts don’t magically disappear. Your creditors will still ask for whatever money they can get back so a bankruptcy trustee will sell your assets and give any proceeds to your creditors. They do this by placing a number of limitations on your lifestyle. These restrictions are usually in place for a period of 3 years.
While the thought of someone selling all your belongings might seem harsh, there are restrictions in place which will allow you to keep all your personal items, such as some furniture, clothes and so on. You are also allowed to hang on to a car and your tools of trade, however the value of these items must fall within the set limitations.
A bankrupt can continue to earn money, however your income is capped and anything earned over a certain amount will be given to your creditors. The amount is determined by how many dependents rely on your income.
In most cases, a Bankrupt can continue to work, although some professions such as accountants, financial planners and real estate agents won’t be permitted.
If you are unsure, check on the AFSA website or contact your licencing authority to find out the details for your industry. The AFSA website also offers bankruptcy advice and information including threshold amounts and restriction details.
Other restrictions on your lifestyle include overseas travel, which requires special permission from the court. A good piece of bankruptcy advice is to double check all the restrictions to ensure they won’t have a dramatic impact on your life.
Bankruptcy and your credit file
The term of Bankruptcy generally lasts 3 years. During this time, all the restrictions of bankruptcy apply. After 3 years the restrictions are lifted, however the bankruptcy remains on your credit file for up to 8 years. Your name will also be listed on the National Personal Insolvency Index for life, which can be viewed by anyone for a cost.
After your bankruptcy
Once your bankruptcy is over, your credit file will show you are an undischarged bankrupt and the restrictions placed on your lifestyle will be lifted. After your bankruptcy, you may still find it difficult to secure finance through traditional lenders, however there are plenty of financial institutions outside of the traditional sphere who are happy to lend to Australians with a bad credit history. Positive Solutions Finance can assist you with this.
Being a discharged bankrupt allows you the opportunity to slowly rebuild your credit score and truly put your financial issues behind you. To rebuild your credit rating and gain trust with lenders you can:
- Pay all your bills on time
- Pay more than the minimum
- Keep up to date with payments
- Avoid making excess credit enquiries
- Avoid credit cards at all costs and instead develop a healthy savings account.
Bankruptcy Advice: Other debt relief options
Bankruptcy is considered the last resort, but many Australians aren’t aware there are several other solutions you can resort to long before Bankruptcy is put on the table. For example, a Debt Agreement was introduced almost 2 decades ago as an alternative to bankruptcy. It can help you repay your debts by negotiating a new repayment schedule with your creditors.
If you are experiencing financial distress or bad debt, seek bankruptcy advice from an expert. Call Debt Rescue on 1800 00 3328. Our Case Managers will help find a positive solution to suit your personal debt situation, provide you with bankruptcy advice and put some other debt relief solutions on the table.