BANKRUPTCY - FAQ
Frequent Asked Questions
WHICH DEBTS DOES BANKRUPTCY COVER ?
Unsecured debts, such as:
- Credit and store cards
- Unsecured personal loans and pay day loans
- Gas, electricity, phone and internet bills
- Overdrawn bank accounts and unpaid rent
- Medical, legal & accounting fees.
- Australian Taxation Office debts
- Mortgage (house is security)
- Car loan (car is security)
- Hire purchase or rent to buy (eg. furniture or electronics as security).
WHICH DEBTS DOES BANKRUPTCY DOESN'T COVER ?
- Court imposed penalties and fines.
- Child support & maintenance.
- HECS & HELP debts (government student loans)
- Debts you incur after your bankruptcy begins.
- Some Centrelink & Ato Tax may not be covered.
- Unliquidated debts (e.g. a debt where you and your creditor are yet to determine the amount). We can assist you with unliquidated debts.
OVERSEAS DEBTS ?
Debts you incur overseas are covered in your Australian bankruptcy.
This means your creditors can't pursue for that debt in Australia.
However, your overseas creditors can pursue you for the debt if you travel back to that country.
This means your creditors can't pursue for that debt in Australia.
However, your overseas creditors can pursue you for the debt if you travel back to that country.
STOPPING DIRECT DEBITS.
It is best to speak to your bank directly if you want to stop a direct debit.
HOW OFTEN CAN I FILE FOR BANKRUPTCY ?
There is no limit to the amount of times you can declare bankruptcy.
CAN I KEEP MY HOUSE IF I FILE BANKRUPTCY?
You can keep your house only if some factors are present.
The two main factors are that you have little or no equity and that you can also make your mortgage payments.
When you become bankrupt, your trustee becomes the owner of your share of any house or property that you own.
This means your trustee now has control over the property and can sell it to help pay your debts.
The two main factors are that you have little or no equity and that you can also make your mortgage payments.
When you become bankrupt, your trustee becomes the owner of your share of any house or property that you own.
This means your trustee now has control over the property and can sell it to help pay your debts.
IS THERE A MINIMUM AMOUNT I NEED TO OWE BEFORE I CAN GO BANKRUPT ?
No. You can become bankrupt voluntarily owing any amount.
CAN I TRAVEL OVERSEAS ?
If you're travelling, or moving overseas you must seek approval from your trustee.
We have not yet had a refusal.
We have not yet had a refusal.
My INCOME ?
There is a protected threshold amount which is yours to keep.
Currently this amount is $1,112.82 after tax per week for a person with no dependants. Yearly after tax $ 57,866.90.
The more dependants you have the higher the threshold (protected amount).
With 2 Dependants the amount is $ $1,413.28 after tax per week . Yearly after tax $ 73,490.96.
If you need to go bankrupt and you are worried about income call us and we will explain how it will affect you.
Currently this amount is $1,112.82 after tax per week for a person with no dependants. Yearly after tax $ 57,866.90.
The more dependants you have the higher the threshold (protected amount).
With 2 Dependants the amount is $ $1,413.28 after tax per week . Yearly after tax $ 73,490.96.
If you need to go bankrupt and you are worried about income call us and we will explain how it will affect you.
MY CAR ?
What happens to your car ?
So that means that you finish paying off the car during the 3 years of your bankruptcy and it is then valued at more than the $7,700.00 threshold.
- If you are the owner of the car and have no loan against it, the value of you car can not exceed $7,900.00.
- If you own the car with your partner or somebody else the threshold doubles to $15,800.00.
- If your car is leased or is collateral for a loan the value of the car now does not matter as long as you can afford to (and want to) continue your loan repayments and your equity in the car is not more than $7,900.
So that means that you finish paying off the car during the 3 years of your bankruptcy and it is then valued at more than the $7,700.00 threshold.
CAN I STILL RUN A BUSINESS ?
You can trade under an ABN number as a Sole Trader.
You cannot be a director of a company or be involved in its management without the permission of the Court during the term of your bankruptcy.
You cannot be a director of a company or be involved in its management without the permission of the Court during the term of your bankruptcy.
What does a bankruptcy trustee do ?
The Trustee oversees your financial affairs for the term of your bankruptcy.
The thing to note about this is that most people who go bankrupt never speak to their Trustee nor does their Trustee have any real involvement in their lives.
The thing to note about this is that most people who go bankrupt never speak to their Trustee nor does their Trustee have any real involvement in their lives.
Do I have to file bankruptcy with my spouse / Partner ?
No. Just because you declare bankruptcy it doesn’t mean that your spouse / partner has to or will even be affected.
Will my employer find out if I file bankruptcy ?
No one will have to find out about it except who you choose to tell.
You don’t have to tell your employer unless it is conditional upon your employment.
You don’t have to tell your employer unless it is conditional upon your employment.
WILL my credit file be effected ?
Your credit file will be marked for a period of five years.
Do I have to include all my DEBTS when I file bankruptcy ?
Yes. You are obligated to include all of your debts.
Can bankruptcy stop wage garnishments ?
Normally, bankruptcy stops your wages being garnished for a debt, if you include it in your bankruptcy.
An exception is if the Australian Taxation Office (ATO) issues a garnishee order against you before your bankruptcy starts. This allows the ATO to garnish your wages during bankruptcy to offset any debt to them.
Note: This only applies if the ATO has a statutory garnishee notice (under s260-5 of Schedule 1 of the Taxation Administration Act 1953).
An exception is if the Australian Taxation Office (ATO) issues a garnishee order against you before your bankruptcy starts. This allows the ATO to garnish your wages during bankruptcy to offset any debt to them.
Note: This only applies if the ATO has a statutory garnishee notice (under s260-5 of Schedule 1 of the Taxation Administration Act 1953).
What assets can I keep ?
Generally you get to keep your
- Household items.
- Furniture.
- Car up to a certain value.
- Tools of trade up to a certain value.
Can I add debts that I forgot to include when i went bankrupt ?
Yes.
my tax refund ?
It depends if you owe the tax office money. If you do they will keep your tax refunds during your bankruptcy until you are discharged from your bankruptcy. When you go bankrupt if you have outstanding tax returns to do then those refunds may go to your trustee.
How long I`m I Bankrupt for ?
Normally 3 years and 1 day.
employment restrictions
Professional bodies and/or trade associations have certain conditions of membership for the duration of a bankruptcy.
There may be restrictions on holding some statutory positions during this period.
Consumers should contact the relevant peak body of their trade or profession to see if there are any restrictions during and/or after bankruptcy.
There may be restrictions on holding some statutory positions during this period.
Consumers should contact the relevant peak body of their trade or profession to see if there are any restrictions during and/or after bankruptcy.
Is there a minimum amount I need to owe before I can go Bankrupt?
No. You can become bankrupt voluntarily owing any amount. A creditor however cannot make you bankrupt unless the debt you owe is $5,000 or more.
What if my house is mortgaged?
The trustee has to deal with any equity or interest you have in a property for the benefit of your creditors.
This may mean that the property has to be sold.
If the property is jointly owned the trustee may consider selling his interest in your property to a non-bankrupt joint owner.
Alternatively the joint owner provided they are not bankrupt may make an offer to purchase the trustees interest in the property.
This may mean that the property has to be sold.
If the property is jointly owned the trustee may consider selling his interest in your property to a non-bankrupt joint owner.
Alternatively the joint owner provided they are not bankrupt may make an offer to purchase the trustees interest in the property.
What happens if someone else also signed the loan agreement?
Will they have to pay if I declare myself Bankrupt?
Will they have to pay if I declare myself Bankrupt?
Yes. They will still have a liability for the total amount outstanding on all debts incurred in joint names.
What about debts incurred after Bankruptcy?
You will be responsible for any debts incurred by you after bankruptcy.
Can a creditor still contact me insisting on payment once I have become Bankrupt?
No.
The Bankruptcy Act prevents creditors from recovering money from you.
An exception is a secured creditor with whom you have made arrangements to retain secured property.
The Bankruptcy Act prevents creditors from recovering money from you.
An exception is a secured creditor with whom you have made arrangements to retain secured property.
Can my Bankruptcy be cancelled or annulled?
Yes. If you strive to pay your debts and an administration fee your bankruptcy may be annulled.
Transfer of assets prior to BANKRUPTCY
The trustee has considerable powers to claim back property or money that the bankrupt may have transferred to others in order to avoid it falling into the hands of creditors. This is an offence under the Bankruptcy Act and the trustee’s powers can include recovering assets that were transferred up to 5 years before the bankruptcy. Similar powers exist to claim back payments to creditors who may have had their debts paid in preference to other creditors shortly before the bankruptcy.
Loan (s) in joint names ?
If one party declares him or herself bankrupt then the other party will still have a liability for the total outstanding amount that is incurred in their joint names.
Secured Debts ?
A secured debt is a debt secured by an asset, such as a bill of sale over a car.
This entitles the secured creditor to recover the property and sell it if you fall behind in payments.
The lender of the car loan, as a creditor, may claim and re-sell your car and if this does not cover the amount of the debt then the creditor is entitled to lodge a claim in the bankruptcy for any loss incurred.
This entitles the secured creditor to recover the property and sell it if you fall behind in payments.
The lender of the car loan, as a creditor, may claim and re-sell your car and if this does not cover the amount of the debt then the creditor is entitled to lodge a claim in the bankruptcy for any loss incurred.
If I have to pay contributions, how much will I have to pay?
You will be required to pay one half of the amount by which your after-tax income exceeds the prescribed threshold* amount ie 50 cents of every $1 of the excess amount.