Money troubles? Thinking about bankruptcy? It is not an easy step to take. But it could be the best option for you.
To help you decide, the following is an overview of what most people want to know about bankruptcy.
Bankruptcy will clear all your unsecured debts with a few exceptions such as child support. It will stop all legal action by unsecured creditors. It will also stop those distressing phone calls by debt collectors at all hours of the day and at your workplace. However, secured creditors such as mortgagee banks still have the right to take action against their security (but read on).
2 BANKRUPTCY PERIOD
Bankruptcy normally runs for 3 years and 1 day unless it is extended for some valid reason.
3 ASSETS & INCOME
You are also entitled to keep:
- your superannuation
- household furniture and most personal effects
- a car or motorcycle up to an indexed value. If they are worth more, you will need to work something out with your Trustee.
If you own a house and there is significant equity in it, your Trustee will likely sell it. If the equity is limited, there might be options to save the house. Please call us to discuss.
If your income is above an indexed amount, you might have some money to pay to your Trustee from the surplus. That will depend, for example, on the number of your dependants and how much child support you pay. Please call us to give you a better idea.
4 FINANCED CAR OR MOTORCYCLE
If you have a car or motorcycle under finance it does not necessarily mean that you will lose it because you go bankrupt. Generally, if you maintain the payments, you will keep your car or motorcycle.
If you are a bankrupt, you can still work as a self-employed plumber, electrician, etc. However, you cannot be a director of a company until you are discharged from bankruptcy. There are some other restrictions mainly for professionals or employees handling money. Please call us if you need to know more.
6 OVERSEAS TRAVEL
As a bankrupt, you can travel overseas for legitimate reasons although you must get written permission from your Trustee. You may even be allowed to live and work overseas. If overseas travel is an issue for you please call us and we might be able to help you.
7 CREDIT RATING
Lenders usually search your credit file compiled by credit bureaus (such as Equifax) before lending you money. Bankruptcy is recorded on your credit file normally for 5 years (3 years as “bankrupt”, 2 years as “discharged bankrupt”) before wiping the record clean. There is also a permanent government register called the National Personal Insolvency Index which can be searched.
WHAT ELSE DO YOU NEED TO KNOW ABOUT BANKRUPTCY?
The golden rule in bankruptcy is to inform your Trustee of any significant changes such as change of address or job, as failure to do so might result in your bankruptcy being extended. Your Trustee has a job to do and if you play your part, bankruptcy will be relatively stress free.
Otherwise, if you want advice specific to your situation, please call us for an obligation free chat. We have helped many people in all walks of life. We talk you to in confidence. And we don’t judge.
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