Bankruptcy Law Changes - What You Need to Know
Bankruptcy is a procedure that you legally apply for when you cannot repay the outstanding debts to all the creditors. It assists you by stopping debt collectors from inquiring about the payments and releasing you from your debt obligations. However, declaring bankruptcy in Australia is only applicable to individuals and not companies.
Bankruptcy Law Changes in AustraliaWhile declaring bankruptcy can release you from debts, it has long-term financial impacts. If you are operating your business as a partnership or a sole trader, you and your partner can file for bankruptcy as individuals. The business can’t become bankrupt. For a business, the process is insolvency or liquidation Here is everything you need to know about declaring bankruptcy in Australia:
How to Declare Bankruptcy in AustraliaNo maximum or minimum income or debt is required to apply for bankruptcy. If you are ineligible for alternative options and cannot repay your debts, you can file a petition to become bankrupt. To declare bankruptcy, you must meet the following requirements:
- Inability to pay debts
- Australian citizen or have a business or residential connection to Australia
- Statement of Affairs
- Debtor’s Petition
To Commence Declaring Bankruptcy, You Can Start by Having the Following Available:
- Your identification, driver’s license, passport, or birth certificate
- Your current address
- A complete list, including the names and addresses of all your creditors. Including both secured and unsecured debt
- The amount of money you owe your creditors
- An Asset and Liabilities statement
What Happens When You Declare Bankruptcy?Once AFSA has approved your application, a trustee will be assigned to manage your financial situation. The process will involve:
- Investigating your financial issues and making efforts to recover assets you might have transferred or sold before declaring bankruptcy.
- Selling assets, including vehicles or properties
- Contacting the creditors and evaluating their claims
- Claiming a percentage of your income for repaying the creditors
Consequences of Bankruptcy in AustraliaWhile bankruptcy offers relief when you cannot pay your debts, it has severe consequences. Declaring bankruptcy in Australia can have an impact on your:
- Assets, most of them would be sold to repay your debts
- Ability to travel internationally
- Ability to get future credit
- Business, employment, and income
- Continuing or starting some professions or trades
- Holding some public positions
- Holding the director’s position in a company
Help With Declaring Bankruptcy in AustraliaWhen your bills pile up, the creditors keep calling for the payment, and you don’t have a way to repay the debt, bankruptcy can be a way to find a fresh start. However, contacting a bankruptcy consultant to explore alternative options, like a formal debt agreement or an informal arrangement, is essential. If declaring bankruptcy is the only way out, a professional can guide you through the process and help you file the proper documents to take control of your financial situation and gradually build yourself up again.
Andrew Bell Bankruptcy Advisor
With over 30 years of experience in debt solutions and bankruptcy in Australia Andrew can find a solution for you.
“Nothing is more satisfying to me than knowing that I’ve helped someone get back on their feet by guiding them through the Bankruptcy Process. Rest assured, you’re in good hands with me as we solve your financial problems together.”