We Specialise in Personal Bankruptcy in Australia
Declaring Bankruptcy in Australia
Declaring personal bankruptcy in Australia eliminates your debt, relieving you of financial stress and letting you get on with your life debt free.
Filing for personal bankruptcy in Australia is often seen as the last resort for people struggling with severe debt. And there are a number of bankruptcy regulations in place to deter people from declaring bankruptcy. However, in some cases the benefits of eliminating your debt will outweigh the potential restrictions temporarily imposed on your lifestyle.
At Revive Financial, we’re personal bankruptcy specialists. Our team consists of fully qualified chartered accountants and registered bankruptcy trustees. We have the skills and experience required to see you through your entire bankruptcy – from completing and submitting the bankruptcy forms, to overseeing your personal bankruptcy through to completion.
Our extensive knowledge of the bankruptcy process means we can help you declare bankruptcy and keep your house. You can also navigate your bankruptcy period with very little impact on your life.
Success Story: Declaring Bankruptcy and Keeping your House
Brad and Tracey are married and shared equal parts ownership of their family home worth $550,000. They’d been able to pay $50,000 off their mortgage before Brad had to personally declare bankruptcy due to his business failure.
Above all, Brad and Tracey wanted to keep their family home during the process, so they approached Revive Financial to declare bankruptcy with a private bankruptcy trustee.
After an initial consultation, the private bankruptcy trustee assessed Tracey and Brad’s situation and was able to give advice and make recommendations of the most appropriate course of action.
The couple had $50,000 equity in their mortgage. Because Brad and Tracey owned equal shares of the home, the trustee was able to make Tracey an offer to purchase Brad’s equity in the property for $25,000.
Tracey was able to accept and the bankruptcy trustee transferred all rights and the title of the property to Tracey.
Tracey is now the sole owner of the property and is solely responsible for making the mortgage repayments. This has allowed the married couple to keep their family home during Brad’s personal bankruptcy.
Our experts can talk you through your situation and provide detailed advice.
Get in touch for a free consultation today.
How to Declare Bankruptcy
Regulations of Bankruptcy
Bankruptcy isn’t a punishment. It’s an opportunity for someone suffering with extreme debt to wipe the slate clean and start over. However, it does affect certain things. There are a number of restrictions and regulations involved in personal bankruptcy that may have an impact on your lifestyle.
Bankruptcy and your Income
There will be a bankruptcy threshold placed on your income. However, you’re still able to earn over this amount. There’s no limit on the amount you can earn while you’re bankrupt. But once you reach a set amount, anything earned over that amount will be seized.
That means 50c from each dollar earned over the set amount will be taken from you and used to pay for the cost of the bankruptcy – or will be divided amongst your creditors. If you do earn more than the set threshold, the amount you owe will be calculated and taken at the end of the financial year, in one lump sum.
Your Personal Bankruptcy and Credit File
Currently, your bankruptcy will be noted on your credit file for a total of 5 years. You’ll be marked as a bankrupt for the period of bankruptcy (generally 3 years). Then it will be noted for a further 2 years that you’re a discharged bankrupt.
If you fail to comply with the rules of bankruptcy set out by your trustee, they might apply to extend your bankruptcy – up to 8 years. If this occurs, it’ll be noted on your credit file for 8 years, then a further 2 years as a discharged bankrupt.
Your name will be noted on the National Personal Insolvency Index for life. This is a register of insolvent individuals that can be accessed by anyone for a small fee – it’s a service mostly used by banks. The only cases people tend to check this register for information on personal bankruptcy is when you’re applying to be a director of a large company or if you’re applying for an expensive loan.
Bankruptcy and Travel
When you declare personal bankruptcy in Australia, you must surrender your passport to your trustee. However, this doesn’t mean travelling is off limits.
If you need to travel overseas, you can apply to your trustee who will set a court appointment with the judge. This process has a non-refundable $150 application fee. You must appear before the judge and your trustee and explain why you need to travel overseas. Your application will either be approved or denied.
If approved, you’ll be allowed to travel overseas, but you must stick to the itinerary you outlined in your court appointment.
Bankruptcy and your Assets
Assets like your house, vehicles, tools and other items of value can be used in bankruptcy to get back money you owe to creditors. However, it’s unreasonable to think people can survive without transport and tools of trade, so the restriction on your assets is actually quite reasonable. Even if your business led you to bankruptcy, not all the assets are at risk.
A bankrupt person may still own a car, as long as its value is within a set amount. They may also keep tools used for work (up to a set amount). General household items like furniture, white goods and accessories aren’t considered as valuable assets and won’t be considered in your personal bankruptcy case.
A bankrupt person is not legally allowed to own property. Unfortunately, your family home isn’t a protected asset and the trustee needs to release any equity in the property once the mortgage and selling costs are paid. There are some legal ways you can keep your property in your family during the course of your bankruptcy. Get in touch with our personal bankruptcy experts to find out how.
There’s no limit to the number of times you can declare bankruptcy. If you’ve been bankrupt before and have found you’re once again in a position where you’re struggling with your debt, you may declare personal bankruptcy again.
After you declare bankruptcy, you’re sent a bankruptcy number that you may then quote to your creditors when they call. Your bankruptcy trustee will work with you to ensure you comply with bankruptcy regulations.
To do this, they may take possession of any assets like your car or property and sell them to distribute the profits amongst your creditors. You must personally comply with these bankruptcy regulations for a period of 3 years or until you’re discharged from your bankruptcy.
An individual may declare voluntary personal bankruptcy. To declare bankruptcy, you must complete Form 3 and Form 6 and submit them to AFSA along with the required supporting documents.
These forms are available for download on the AFSA website and you can complete them yourself. But if you’d like the backing from our specialists – who have decades of bankruptcy knowledge and experience – we can assist you.
It’s also possible for a creditor to force you into personal bankruptcy through a bankruptcy sequestration order. If you’ve been made bankrupt this way, your appointed bankruptcy trustee will be in touch to begin the bankruptcy and ensure you comply with the bankruptcy regulations. You may decide to challenge a sequestration order by seeking a review in court.
There’s no set debt amount required to qualify for bankruptcy. However, you should consider the bankruptcy regulations and consequences of bankruptcy before you decide to declare it.
If you’re only struggling with a small amount of debt, the impact bankruptcy has on your life may outweigh the benefits of eliminating the debt.
No, you may not be a company director during the bankruptcy period. You are also unable to manage a company unless you have the permission of a court.
Filing bankruptcy is the act of declaring to your creditors that you don’t have enough wealth, either in cash or assets, to repay the debts you owe.
So, when you file for bankruptcy, a trustee is assigned to you to enforce a number of restrictions. These include taking possession of and selling your assets, garnishing your wages and limiting overseas travel.
This is all done in a bid to recover some of the money you owe to your creditors. When the bankruptcy period is over, your debts are considered to be settled and creditors cannot pursue you for further payment of these debts.
Secured debts cannot be included in a bankruptcy. These can include:
- A loan secured against a vehicle (within the indexed amounts)
- Radio Rentals
- Centrelink debts.
You must maintain the repayments on these debts outside the bankruptcy. Failing to make payments on these debts may result in recovery action, repossession of the asset or assets, or garnished wages.
For more information on bankruptcy in Australia, get in touch with us for a free and confidential consultation
For insightful information on personal bankruptcy, discover our extensive archive of bankruptcy articles.