Personal Bankruptcy Facts
Applying for Bankruptcy can be the most positive step towards a fresh start. It will help you achieve a mostly debt free start when it comes to your unsecured debts. If you are insolvent, the bankruptcy act will help to protect you from your creditors.
Debt Collection Agencies and banks would like you to think differently about the consequences of bankruptcy. In fact, the truth about bankruptcy may hurt their business. Bankruptcy provides you with instant debt relief for most unsecured debts if you can no longer pay your bills as, and when they fall due. At this stage, you are insolvent and this qualifies you for protection from your creditors under the Bankruptcy Act.
That said, filing for bankruptcy for the wrong reasons can bring legal problems. There may be better options for your case that you are simply not aware of.
You Need To Be Insolvent
Insolvency means that you no longer can meet your payment obligations on all your bills and living costs as and when they fall due. Do not consider bankruptcy for any other reason. Be aware that there is plenty of misleading information out there about bankruptcy.
Ignore Scare Tactics
Reality often varies from what you have been told by Debt Collectors or others not familiar with the Bankruptcy Act. Don’t listen to those who tell you you will lose everything. Nobody will take your furniture, TV, computers, white-goods etc., unless you bought these items on a secured loan and are no longer paying this loan. Most store loans are actually credit cards or lines of credit and customers don’t always realise this and are rarely told. In other words, you may have an unsecured loan for goods which can be included in bankruptcy without you losing these goods. Also, by eliminating all of your unsecured debts you are likely to now be in a position to manage your secured loan again and have a choice to keep or relinquish such loans.
The Bankruptcy Act is there to protect people from creditors when they no longer have the means to pay them. Legally you are entitled to use money for your living costs and put food on the table. Moreover, thresholds are in place to keep things fair. Ask us about this and we can let you know what the threshold for your particular situation would be.
A Bankruptcy Notice is the last call of action by a Creditor who feels that you have ignored them or a creditor that understands that you may not have the cashflow to pay your debt. This creditor is demanding the sale of your assets to recover the money from you. Do not try and hide any assets now, you will be discovered and prosecuted for bankruptcy fraud. This is will only compound your existing problems. If you are in a position to make a suitable payment, contact the creditor as soon as possible and ask them to accept your payment. The longer you wait the higher your cost will be as you will also be charged interest and the creditors legal fees.
The Bankruptcy Notice will be stamped by AFSA which means that the creditor has lodged and gained approval for his claim with the Australian Financial Security Authority and it is legitimate. In many cases, people ring us only 2 days before the deadline on their Bankruptcy Notice and that is too late for us to do anything. Contact A1 Debt Assistance as soon as possible if you are served. Once we have a clear understanding of your situation we will explain the options.
Timing Is Crucial
In most cases if you cannot satisfy the creditor with a payment, entering into voluntary bankruptcy as soon as you receive the Bankruptcy Notice may be the best option for yourself and the creditors. A1 Debt Assistance will provide you with professional bankruptcy help and will prepare all of the required legal documents on your behalf and lodge your voluntary bankruptcy with the Government – as long as you contact us as soon as you get the Bankruptcy Notice. Timing is crucial and swift action will often prevent escalating problems. Call us too late and we will not be able to help.
Bankruptcy is not the only solution. Debt Agreements, also referred to as “Part 9”, can help you through the process. You can repay most of your unsecured debts via one regular payment as long as you meet the qualifying criteria and thresholds. Fines, HECS and some other unsecured debts can not be covered under a Debt Agreement or Bankruptcy. You can obtain all the facts about Debt Agreements from A1 Debt Assistance at any time. A Debt Agreement is NOT to be confused with debt consolidation . You can only qualify if you are unable to meet your current payment obligations, amongst other qualifying criteria. Full details related to your situation will be available during our phone consultation.
Undeniably, a Debt Agreement is not for everyone who experiences financial difficulties, but under the right circumstances it can be a great option to reduce your current repayments and let you manage again without going bankrupt. Importantly – a Debt Agreement does still fall under the Bankruptcy Act and does impact on your credit rating. So it only suits some and may not be of benefit for you.
There is a perception that bankruptcy is just a convenient way out of problems or, worse, a deliberate business rort. That may be true of a very small percentage, but almost all of the clients we have dealt with hit hard times when circumstances beyond their control changed. Circumstances relating to the economy or personal or both, yet the reality was that clients that declared bankruptcy genuinely needed to do so.
You need debt assistance If:
- Debt Collectors are chasing you and you have no way to pay them;
- You are up to date with your payments, but only because you are increasing your credit;
- You can no longer pay your regular bills.
Studies have shown that a large number of the Australian population are suffering under the burden of debt, with more and more working families feeling the pain from increasing costs.
Debt collection agencies often use “bankruptcy stigma” as a psychological weapon. Your name will not be published, unless you are a celebrity and the media discovers your financial problems. Your friends and neighbours will never know unless you tell them and you may be surprised to hear that one or the other may have gone through bankruptcy themselves at some time. Many famous people an d companies have declared bankruptcy: Walt Disney, General Motors, Kim Basinger and Meatloaf, to name a few.
Commonly many questions arise after your lodgement. A1 Debt Assistance will support you throughout your bankruptcy and help you answer these questions correctly at no additional cost. This is a very rare and important part of our service. It is what sets us apart from our competition – our dedication to your ongoing support.
Not Filing For Bankruptcy
Until you are bankrupt, your assets are not protected under the Bankruptcy Act. Any of your creditors can obtain a judgement against you and can send the sheriff to your home to collect your TV, car, furniture and anything of value. It will be sold at auction at a low price and you may be left without your goods and if the sale does not cover the amount of your actual debt you will still owe money to the creditors. Bankruptcy can actually protects you from this.
A creditor can also obtain a court order to have money taken out of your wages – this is called garnishing wages. If you already have your wages garnished and can no longer survive on the income that remains, bankruptcy will stop your wages from being garnished, unless it is for the payment of fines.
Financial stress can make you feel sick, the pressure impacts on your health, relationships and every other aspect of your life. Debt consolidation is not always your best option, it often simply prolongs your suffering and you are left with more debt than your budget can cope with. Financial Assistance from family and friends can often help, but only if you are certain that you can repay these debts based on your current income, not on a projected income. Be realistic: a budget is based on your current earnings, not on future goals.
Be aware that free online bankruptcy information and other related subjects are generic, and are not always consistent with the Australian Bankruptcy Act. Make use of our free phone consultation service – remember it is offered without any obligation and is strictly confidential. On average, we talk approximately 80% of people out of bankruptcy when they call us – this means we do not get paid for this service, but it is exactly why I started A1 Debt Assistance. At A1 Debt Assistance we want to help as many people as possible to make an informed decision when it comes to bankruptcy and not go through a messy situation like I did. Prevent the pitfalls and Don’t go it alone unless you are an insolvency expert.
We will complete all required Bankruptcy documentation and make the lodgement with the government in a matter of days. When the papers are professionally prepared you can, in most cases, expect the process to be straightforward during your bankruptcy, limiting the questions and requests from your Trustee.
All of our fees include a full 3 year bankruptcy support at no additional cost. This will help you understand issues that commonly arise after lodgement and also to answer any of the questions your trustee may have for the duration of your bankruptcy.
- Personal Bankruptcy from $399
- Business Bankruptcy from $699
- Home Owner Bankruptcy from $699
- Company Director Bankruptcy from $999
Run a free or a paid Veda Credit Report If you are not sure about all of your debts or no longer have documents for some or all of your debts, you can apply for a personal credit report via Veda. Veda is an Australian Credit Reporting Agency and has an online credit check option. Veda can email you a copy of your credit report within 48 hrs if you pay for the service, or you can request a free copy, (you may have to wait up to 10 days for your report). So if you are not sure and think you need to run your personal credit check, visit Veda.