Can You Go Bankrupt With No Assets?
Going bankrupt with no assets in Australia is an option for deeply indebted people, especially if they have few realistic options for repaying their obligations. Declaring bankruptcy may not be a terrible option if you cannot satisfy creditors with various plans to settle your obligations. In this guide, we answer questions such as “Does bankruptcy clear all debts?” and offer suggestions on declaring bankruptcy with no Assets.
What Is Bankruptcy?
Bankruptcy can be used by those who cannot financially repay their debts to creditors. It helps debtors avoid having to deal with constant harassment by collectors. Once you’ve been made bankrupt, most of your debts are forgiven.
In exchange, you must agree to repay your creditors as much as possible through a repayment schedule or by selling your assets. However, if you go bankrupt with no assets, your creditors will get nothing in return, and you will be free of debts after the bankruptcy declaration. After completing the bankruptcy procedure, you will be given a fresh financial start.
However, it is essential to highlight that going bankrupt in Australia is only available to people, not organisations. If you run a business as a sole proprietorship or partnership, you or your partner can file for bankruptcy as distinct entities. Remember that a company cannot go bankrupt. The options for companies are insolvency and liquidation.
Eligibility Criteria and Requirements
Australia has no specific strategies for going bankrupt without assets; the requirements are the same for people with assets. We recommend discussing your case with our bankruptcy debt management professionals so they can develop a tailored plan specific to your situation. Some of the requirements for bankruptcy without assets in Australia include:
- You have a residence, business, or are present in Australia.
- You are unable to pay your creditors in the set time.
- If a debt agreement currently binds you, you must cancel it before applying for bankruptcy in Australia.
- You will have to pay no fee for registering yourself bankrupt.
- There is no certain minimum or maximum amount of debt to apply for bankruptcy in Australia.
Before You Apply for Bankruptcy With No Assets
Remember that bankruptcy should be your last resort, and you should not opt for it if you can work out alternative payment methods, such as Debt Restructuring or a Debt Agreement. Although bankruptcy seems like an easy way out, it comes with many consequences, which we explain on this page: Why should I go Bankrupt?
We suggest you contact one of our debt management professionals, who can examine your situation and provide guidance and choices for debt management. We also produce a guide which you can download and review.
When applying for bankruptcy, it would be best to know your options before you get into further proceedings:
- Your advisor will ask you or contact your creditor to negotiate your situation. You can ask the creditor to give you extra time to pay off your debts or reduce the amount.
- To avoid going bankrupt, inform them about your financial issues or any other barriers preventing you from paying off the debts. The creditors might understand your problem and accept to find a middle ground to repay a sum of money you can afford within an agreed period – known as a Debt Agreement. However, if your creditor does not accept to compromise, he can file a lawsuit and make you bankrupt.
- You can also opt for the Declaration of Intention, where the law permits you twenty-one days of security from your creditors and prevents them from taking action against you. This can be an excellent opportunity to arrange money and pay your debt.
- Another option can be pursuing your creditor to sign a Personal Insolvency Agreement with you, allowing you to repay some of your debt in instalments. In this way, you can free yourself from some pressure, and it would become easier to pay off the money in instalments.
- If these options do not work, you must go through the following process of applying for bankruptcy in Australia.
Process of Applying for Bankruptcy
You must be aware of how much money you owe overall and the nature of every debt. To establish your present debt condition, list everything you owe. Analyse and arrange your debts based on their required amount and type. Then, prioritise them based on the ones you want to pay off first. Our team can help you with this process.
Once this is done, the Australian Financial Security Authority (AFSA) will let you choose to either have an official or a registered trustee administer your debts and help you with the bankruptcy process. If you opt for a registered private trustee, they will have to fill out a consent to act as a trustee form for their application, or else you will get an official trustee by default. You can read more about this process on our Free Bankruptcy Advice page.
When you provide your trustee with the information regarding your debts and income, your trustee can also help manage your debts by selling your assets; however, this option will not be valid if you go bankrupt with no assets.
Applying for bankruptcy in Australia requires you to complete the statement of affairs and the debtor’s petition form with the AFSA. Ensure you review all the requirements and give all the information as accurately as possible. Your trustee will inform your creditors that you are bankrupt, so they will stop contacting you.
After applying for bankruptcy, you will be free from unsecured debts such as rent, personal loans, and credit card payments. However, bankruptcy does not free you from all obligations. HECS-HELP or child support debts are not covered, so you must discuss payment options with creditors. Our team can help you work this out.
Going Bankrupt With No Assets
“Going bankrupt with no assets in Australia is a relatively straightforward process. Once you’ve completed the process, you are legally free from repaying any debts; nevertheless, several exceptions exist, and there are consequences to consider. Bankruptcy is not something to take lightly, but we are here to help you and ensure the process is as smooth as possible.”
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.”