When it comes to
Bankruptcy Melbourne, often people
aren't aware that there are both voluntary, and involuntary bankruptcy - both
have unique methods and rules.
Involuntary
bankruptcy takes place when someone you owe money to applies to the court to
declare you bankrupt. Generally when you get one of those notices, you have
normally 21 days to pay all the debt. If you do not, then the creditor returns
to the court and asks the court to issue a sequestration order that declares
you bankrupt. A trustee is appointed, and then you have 14 days to get the
documentation in and then you are bankrupt.
You can contest
a bankruptcy notice by going to court right after the 21 days have expired and
put your case forward, to avoid it going to the next level. Apart from the way
you became bankrupt there is in fact no distinction between Involuntary
Bankruptcy and or Voluntary Bankruptcy - once you are simply declared bankrupt,
they're administered to in the same way.
However, when it
comes to Bankruptcy for this, the stress, torment and fear that accompanies
this process is incredible. If you think you are in all likelihood to be made
bankrupt by someone, get some guidance and act on that advice. Generally I've
found it's always far better to know what you can and can't do before you have
someone bankrupt you. Once you are bankrupt, it's generally far too late.
Voluntary Bankruptcy
Nevertheless,
when it comes to Bankruptcy, sometimes there are times that it is the most
ideal option. So you may want to ask yourself, 'when should I consider
voluntary Bankruptcy?'.
This question is
not the very same for every person of course, but commonly I find that one way
you could work it out is to figure out just how long it will take you to pay
each of your debts - if its longer than 3 years (the period you are declared
bankrupt), then this may really help you make that decision, and help you to
understand Bankruptcy.
Once, I had an
80 year old pensioner, who spoke to me once regarding * Bankrupcty tell me that
her credit card statement calculated how long her debt would take to pay at the
level she was paying off her account, and it was 35 years! Imagine 35 years for
one credit card bill.
Credit rating
damage can really help you think this through. If you move house and forget to
pay your $30 phone bill for 6 months more, it's very likely the telephone
company will default your credit file. That default will sit on your file for 5
years, so for $30 you can have your credit file truly damaged for that period
of time - and all of this will affect how you have to approach Bankruptcy.
In many ways,
the ease with which companies/credit providers can default your credit file is
unfair. The punishment doesn't seem to equate to the crime in my book. So if
you actually have defaults on your credit report for 5 years, remember that
bankruptcy is on your credit file for a total 7 years then its erased
completely.
So if your
credit rating is a big issue in trying to decide whether to participate in a
Debt Agreement or Personal Insolvency Agreement or Bankruptcy remember they
will all sit on your credit file for a total of 7 years. The biggest variation
is that with a DA or PIA you pay back the money and still have it on your file
for 7 years.
Bankruptcy
I have mentioned
the word a few times now, but when it comes down to it, Bankruptcy is the
biggest part, and the element more people are afraid of when they come to me to
review their financial situation and Bankruptcy. The other side of crime and
punishment equation is bankruptcy, and in this specific country the provisions
are very generous: you can go bankrupt owing millions of dollars and after 3
years it's all finished with no strings attached. Compared with countries like
the United States, our bankruptcy laws are quite generous.
I don't pretend
to know why that is but a few hundred years ago debtors went to prison. These
days I suppose the government thinks the sooner it can get you back on your
feet working and paying tax, the better. It makes more sense than locking you
up which costs the taxpayer anyway.
Bankruptcy wipes
all of your debts including ATO debts with the exception of a few things:.
·
Centrelink Debts, Court Fines
like parking and speeding fines.
·
HECS or Fee Help loans.
·
Money to take care of a car
accident if the car was not insured.
There is a lot
more that can be said about this and Bankruptcy in general but the purpose of
this blog was to help you decide between a few available options. When getting
some advice, bear in mind that there are always options when it relates to Bankruptcy
in Melbourne, so do some study, and Good luck!
If you wish to
learn more about exactly what to do, where to turn and what questions to ask
about Bankruptcy, then don't hesitate to speak to Fresh Start Solutions
Melbourne on 1300 818 575, or visit our website: freshstartsolutions.com.au/bankruptcy-Melbourne
