Does bankruptcy clear ta or credit card debt? Bankruptcy can be a solution when you are in serious debt. Some items can be omitted. Check out our FAQs or talk to¬†an insolvency practitioner¬†at Bankruptcy Advisory Centre, today‚ÄĒ1300 887 210

" />
Call us:
1300 887 210

Does Bankruptcy Clear Tax Debt? Will I Lose My Car? Plus Other Bankruptcy FAQs

There is are a lot of myths and misunderstanding about bankruptcy, and what it means for you and your family.

Here are just a few:

Will I have to sell my House?

Not necessarily, it is possible to keep your family home subject to meeting the requirements of your Bankruptcy Trustee.

For example if you owned the family home jointly with your wife or partner and the property is valued at $500,000 and you have a loan against property for $475,000 then you have $25,000 in equity. That equity is not all yours it belongs 50/50 with your partner. Therefore your trustee will require you to pay or raise from either your partner, family or friend $12500. If this can be achieved and you and your partner can still make the loan repayments then yes you can save your house.

You will no longer own the property that will now belong to your wife/Partner.

Will I lose my car if I claim bankruptcy?

A vehicle with a value or equity to the threshold of $7,900 may be retained. A vehicle with the value/equity over the threshold may be purchased from the Trustee by a family member/friend. Example if you had a car valued at $30,000 and you had a loan against the vehicle for $23,000 then you have $7000 worth of equity you can therefore keep the car if you could still make the loan repayments.

Everyone's personal; financial situation is different. Talk to a bankruptcy solutions expert to find out how you will be affected. 

Will everybody know that I have gone Bankrupt?

There is no advertising that you have entered into Bankruptcy so nobody will know that you have had to take this course of action. This whole process can be very distressful so that when it has been completed and you are now Bankrupt you don’t need everyone to know as well. The idea with Bankruptcy is to remove the debt, remove the pressure so that you can get back on with leading a normal life with you wife, partner children and family.

Can I still travel overseas?

Yes you can travel overseas all you need to do is advise your Trustee and he will give you approval to travel. It would be very unusual for the Trustee not to approve this request.

Can I still work for myself?

You are still able to work for yourself as long as you operate as a sole trader with an ABN. You are not able to be a Director of a company or in a partnership. Bankruptcy is designed to take away all your past problems and give you the ability to get back on with your life so it is important that you can get back to work earn and living and be able to enjoy life again and Bankruptcy gives you another chance to be able to move on without all the pressure.

You do not have tell anyone while working as a sole trader unless you need to obtain credit for more than $5613.

A bankrupt may keep tools of trade to earn an income up to a limit of $3700.

Is my Superannuation safe?

The simple answer here is yes your Superannuation is not touched regardless of how much you have in your fund.

Will they come and take all my Furniture?

The debt collectors will stop making contact with you and the demand letters will stop and no, you won’t lose your furniture or personal affects. Again Bankruptcy is here to help not make you miserable for the rest of your life.

Will I stop getting phone calls from Debt Collectors?

The debt collectors will stop calling and the letters of demand will stop arriving in your letter box. After you have declared yourself Bankrupt and after you come out of Bankruptcy in 3 years they still won’t be able to contact you as the matter is finished and the debt you owed before you went bankrupt has gone forever and cannot be requested ever again.

How much can I earn when I am Bankrupt?

The Income you can earn is calculated for each individual based on the number of dependents and adjusted upwards by the government (AFSA) in March and September each year to allow for movements in the cost of living.

With no dependents the net income amount you can earn that is protected by bankruptcy law is $57,239.00 net per annum, i.e. that’s an average of $1100.75 per week net take home pay.

This is your money and you need the money to cover the cost of living, your rent or mortgage, groceries, getting to and from work, medical bills and insurances, running your car etc. Anything you earn above this amount you split 50/50 with your bankruptcy trustee for the period of your bankruptcy.

With 1 dependent at home the net income amount you can earn that is protected by bankruptcy law is $67,542.02 net per annum, i.e. an average of $1298.89 per week net take home pay. This is your money. Anything you earn over this amount is split 50/50 with your bankruptcy trustee for the period of your bankruptcy.

With 2 dependents the net income amount you can earn that is protected by bankruptcy law is $72,693.53 net per annum, i.e. an average of $1397.95 per week net take home pay. This is your money. Anything you earn over this amount is split 50/50 with your bankruptcy trustee for the period of your bankruptcy.

With 3 dependents the net income amount you can earn that is protected by bankruptcy law is $75,555.48 net per annum, i.e. an average of $1453 per week net take home pay. This is your money. Anything you earn over that is split 50/50 with your bankruptcy trustee for the period of your bankruptcy.

With 4 dependents the net income amount you can earn that is protected by bankruptcy law is $76,700.26 net per annum, i.e. an average of $1475.01 per week net take home pay. This is your money. Anything you earn over this amount is split 50/50 with your bankruptcy trustee for the period of your bankruptcy.

With more than 4 dependents at home the net income amount you can earn that is protected by bankruptcy law is $77,845.04 net per annum, i.e. an average of $1497.02 per week net take home pay. This is your money. Anything you earn over this amount is split 50/50 with your trustee for the period of your bankruptcy.

After I come out of Bankruptcy will I still have to pay the money that I owed?

After you have completed your 3 years as a Bankrupt the past is gone and you do not have to worry about any of the debt from the past. You will not receive any phone calls, letters of demand or have any debt collectors knocking at your door the matter is complete and you can go forward in confidence that the past will not come back to haunt you.

How long am I Bankrupt for?

You are Bankrupt for 3 years*. Trustees may, under certain circumstances, lodge an objection to discharge which could potentially extend the period of bankruptcy past 3 years. Usually this occurs if you do not comply with the Trustee's request.

After this period, you can do whatever you please. You could become a Director or Secretary of a company, you can then earn as much income as you like, you will not have to ask for permission to go overseas and nobody would have been aware that you have been in Bankruptcy.

This term can be based on individual circumstances and you should talk to one of our team to find out how long your term of bankruptcy is likely to last. Call us today for an obligation free chat.

Will my credit rating be affected?

Yes your credit file will be affected for 5 years so it will be difficult to get a loan until the Bankruptcy automatically falls after that time.

Are all my debts gone after I go bankrupt?

Some debts are not covered by Bankruptcy. Court imposed fines, Family support payments, HECS debts and Centrelink. 

To find out about how going bankrupt will affect your personal insolvency situation, talk to one of our experts on an obligation free call.

What debts are not included when I go Bankrupt?

Some Centrelink debts.

Victims of crime debts.

Court imposed penalties, fines.

Child support & maintenance.

HECS & HELP government student loans.