Bankruptcy In Australia

If you can no longer pay your mortgage or financial debts and you have used all the debt relief options including debt consolidation then, bankruptcy maybe the only option for you.

Through bankruptcy you can have your credit card debt and personal loan debt canceled and start your life with a clean slate. It is also important to think very carefully about the consequences and complications that come with bankruptcy.

Bankruptcy Law In Australia

The bankruptcy law has been put in place to help you if you are no longer have the capacity to service your debts and are unable to come to an agreeable settlement with your creditors. In these circumstances the best option is to consider filing for bankruptcy.

Bankruptcy in Australia is authorized under the Bankruptcy Act of 1966 which states that only a person or individuals can file for bankruptcy. In Australia this is as the debtors petition.  For businesses and corporations the term liquidation is used. 

As an Australian you can file for bankruptcy in 2 ways. This can be voluntary where you take it upon yourself to start the proceedings. The less common way is for creditors to start the proceedings and have you declared bankrupt through the judicial system. However, a creditor can only do this if the outstanding debt exceeds $2000.

Under the act a person can file for bankruptcy by filing a petition with the Insolvency and Trustee Service Australia (ITSA). One of the key requirements under the ACT is a document called the Statement of Affairs. It is this document that details an individuals assets and liabilities including your unsecured debts when filing for bankruptcy. When this and the debtors petition is filed the process officially begins.

Once the petition and statement of affairs as been filed your unsecured creditors can no longer contact you about your outstanding debts. If they do then report this immediately to your appointed trustee or the ITSA if you have not appointed one.

It is important to point out that bankruptcy does not mean that your immune to all debts. For example during the process you will still be liable for your utility expenses including your gas and electricity. Other debts that are immune are government and student loans or any pending court fines and penalties.

What Assets You Can Retain After Bankruptcy

This is a common question that people ask when they are considering bankruptcy. The following are a list of assets that you can still retain.

• Equity within a residential property
• Auto vehicle with a maximum value of $8650
• Tools with a maximum value of $3400
• Essential household goods

What Assets You Can't Retain

Under the bankruptcy act there are certain assets that are not protected. These unprotected assets become the responsibility of your appointed trustee.

• Personal items of value such as jewelry or antiques.
• Auto vehicles with values in access of $8650
• Tools with values in access of $3400
• Cash accounts balances in access of $2000
• Equity tied up in a residential property

How Long Does the Process Last

Once a person meets the filing requirements and presents the petition the bankruptcy process officially begins. In Australia most bankruptcy cases will last 3 years. However, this can be reduced if the debtor has honored and repaid the outstanding debts.

On the other hand, if the debtor has contravened any of the conditions within the personal insolvency agreement the trustee can request for an extension.

Bankruptcy will affect you credit score. Even after your discharged from bankruptcy you it will remain on your credit report for up to 7 years. 

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