Overwhelming debt can be extremely hard to deal with, especially when you don’t have many options to fall back on. Luckily, under the Bankruptcy Act of 1966, there are a few options you can decide between. You can make debt agreements, personal insolvency agreements, a declaration of intention to present a debtor’s petition, or you can file for bankruptcy. Before going through with any of these, it is suggested to talk to a financial advisor. All of these options have consequences, it is important to make sure you are not putting yourself in an even worse position by applying for any of these options. If you decide that bankruptcy is the only option, read more for details.
What is bankruptcy?
Under bankruptcy, you are proven and declared to be unable to pay back your debts. This can sometimes allow you to make a new start with debt relief. Once you become bankrupt, either through a debtor’s petition or a creditor’s petition, you are appointed a trustee. Trustees are in charge of managing your case of bankruptcy and can be a registered trustee or an official trustee. If you choose, you can nominate a registered trustee to handle your case.
Unfortunately, while this seems like a perfect option, there are downsides to registering for bankruptcy. Because of this, it is, of course, important to make absolutely sure that this is a necessary decision for you, preferably with the help of a financial expert. Some of these consequences are:
- Your ability to get credit in the future may be difficult – credit agencies keep your bankruptcy record for 5+ years
- There is a National Personal Insolvency Index in Australia that your name will permanently be listed on
- A trustee isn’t just there to give you advice, they will manage your entire bankruptcy. This means a few things:
- You must provide any information on changing financials, such as bank statements or other documents they may request.
- You may need to make mandatory payments to your trustee depending on how much money you make
- You must request permission from them to travel overseas
- A trustee is able to sell your assets
How to Apply for Bankruptcy in Australia
If you have considered all of your options and have decided that bankruptcy is the ideal way to relieve you of debt, there are a few steps you must take to apply. First, go to the official Australian Financial Security Authority site to download the bankruptcy applications that you will need to fill out. They also have resources on their site for how to send this documentation to them.
Once the AFSA has received your application, they still need to accept it. Luckily, there is no fee to apply to bankruptcy. If found ineligible, you will receive a notice stating so. While there is no maximum or minimum debt amount to qualify, there are two main requirements for getting accepted:
- You must be in Australia, or have a business or residential property connected to Australia
- You must be entirely unable to pay your debts on time
If you are found eligible for bankruptcy, they will send both you and your creditor’s confirmation. This will have your AFSA number on it, which will be important to hold onto as it is possible that you will be asked for it by different parties in the future such as your creditor. For assistance on how to handle this situation, learn more about bankruptcy Brisbane by NR Consulting.