If you feel under pressure from financial debt you should consider bankruptcy as a last resort. There are alternatives that may be available to you that will allow you to avoid the restrictions that bankruptcy carries with it. AFS can outline these debt solutions for you.
You can become bankrupt voluntarily or
otherwise you may be forced into bankruptcy on
application by one of your creditors to the Court, in a situation
where you cannot pay your debts as and when they fall
due.
A trustee will be appointed to administer the bankruptcy, which will be either a registered trustee or ITSA. A bankrupt has a number of responsibilities to the bankruptcy trustee during the bankruptcy period.
Generally the period of bankruptcy lasts for three years, during which time the debtor is referred to as an undischarged bankrupt. The period may be extended in certain circumstances upon lodgement of an objection by the bankruptcy trustee; such an extension may be up to 5 or even 8 years where there has been poor conduct by the bankrupt.
The bankruptcy trustee will be responsible for carrying out various functions which will include:
- Securing and effecting the sale of the bankrupt's existing divisible assets, or any assets acquired after the bankruptcy has commenced but before discharge from bankruptcy;
- Determining and collecting the appropriate amount of income contributions from the bankrupt;
- Examining the bankrupt's prior conduct and investigating whether any financial recoveries are available from related or other parties, or whether offences committed under the Act have occurred;
- Reporting and meeting with creditors; and
- Effecting distributions to creditors from monies gathered in by the bankruptcy trustee.
There are also significant restrictions that are placed upon a bankrupt during the relevant bankruptcy period. These include:
- A requirement to contribute part of your future income (above a set threshold) to the trustee;
- The net value of your motor vehicle that you use cannot exceed a set threshold (i.e. $6,300 at January 2008);
- An inability to incur credit above an amount of $3,000 without disclosing that you are an undischarged bankrupt;
- An inability to manage a company, including acting as a director, without the consent of the Court;
- A requirement to attend meetings with the trustee and meetings of creditors when called upon to do so;
- A requirement to immediately advise the trustee if you change residential address; and
- Your passport must be delivered up to the trustee, and consent must be obtained from the trustee (which may be withheld) if you wish to travel overseas in the future.
The above summary demonstrates that the consequences of bankruptcy are serious and the impact on your everyday life is significant. The debt solutions that AFS can discuss and assess with you, such as a debt agreement, may avoid + and release you from the debt pressures that you experience today.
We have outlined more information on bankruptcy in our frequently asked questions list that you may wish to consider. Otherwise, take control and pursue your financial freedom by contacting us now at AFS to discuss the debt solution that best suits you.