Bankruptcy Solutions FAQ’s

Here we aim to answer the most frequently asked questions we receive. If you have a more complex question, please reach out to us via our contact page, where a consultant will personally answer your question for free.

Frequently Ask Questions

Will my income be affected by bankruptcy?

Should you meet any of the below thresholds, you will be required to pay 50% on every dollar over the threshold. For example, if you have no dependents and earn $55,000 per year (after tax), after $52,543.40, you will have to contribute 0.50 cents on every dollar earnt. No dependents – $52543.40 (After Tax) – 1 Dependent – $62,001.21(After Tax) – 2 Dependents – $66730.12 (After Tax) – 3 Dependents – $69,357.29 (After Tax) – 4 Dependents – $70,408.16 (After Tax) – Over 4 dependents – $71,459.02 (After Tax) Often times where individuals have had to pay a contribution from their income due to being above the threshold. They have still found substantial release from financial burden as they have still been released from their debts through bankruptcy. We recommend speaking with our bankruptcy experts to calculate and determine if the positives of protection through bankruptcy will still outweigh the negative of contribution to your bankruptcy estate from your income.

I am (or have been) a sole trader/company owner. How will bankruptcy affect me?

You can still continue your sole trader-ship whilst you are bankrupt. Please refer to the previous section to see how it will affect your self-managed income. If you are the director of a company, unfortunately under The Corporations Act, you are unable to stay on as director of said company whilst subject to bankruptcy. The process is as follows. – Specific forms are lodged with ASIC and you relinquish your position as director. – If no directors, ASIC will deregister the company.

Can I keep my house?

Property is the asset most sensitive to the bankruptcy process. Often, individuals are ready to part with the property so the likelihood of the property being sold is a non-issue. However, if you do have property that you intend on keeping, it is recommended you discuss the amount of equity in the property with your bankruptcy consultant to determine the likelihood of the property being sold by the trustee during the bankruptcy process.

Can I keep my vehicle?

A trustee will not have any interest in your vehicle if the market value of the vehicle is $8,000 or less. Our consultants can help you to determine the likelihood of your vehicle being sold through the bankruptcy process.

Will I ever be able to get another loan?

Yes! When requesting loans over a certain amount, you will need to disclose that you are in bankruptcy to the creditor and the loan will be at their discretion. Creditors have a record of your bankruptcy from either five years from the date you became bankrupt or two years after your bankruptcy ended (whichever of the two is later). However, after this point, your bankruptcy will not be evident via a creditors standard check and you are not bound to having to disclose that you were a bankrupt.

Am I allowed to leave the country?

Yes! You’re able to enjoy overseas travel throughout your time in bankruptcy. However, you do need to seek written consent from your bankruptcy trustee before leaving the country as it is an offence to leave without first having done so. This is typically a quick and straightforward process (depending on the circumstances surrounding your bankruptcy).

Will my superannuation be affected?

The short answer, No! As long as the superannuation in your nominated super fund/s has been accumulated over time (i.e. your employer/s have slowly contributed weekly to your fund) your super is protected through bankruptcy. If you have made or received lump sum payments or pay outs within the last five years, protection may not be the case. If you do fall into this category, speak with one of our consultants further on this matter.

I have more complicated question not answered here, how can I have this resolved?

Not a problem! That is exactly what our service is for, answering your questions! Please just head to our contact page. Once you’re details are entered a consultant will SMS you to organise a time to go through all of your questions.

Can I travel overseas when declaring Bankruptcy?

Yes, you can. You will need written consent from your Bankruptcy Trustee before you travel – they will require details of your trip and how long you intend to be out of the country. The Trustee may retain your passport but you can request for its return when you intend to travel. It is very important that you obtain the approval of The Trustee prior to travel in order to comply with the rules of the Bankruptcy Act. If you need to know more regarding travel, call Bankruptcy Solutions on 1300 339 604.

Can I keep my home when declaring Bankruptcy?

In a lot of cases the answer is YES! Bankruptcy Solutions can help you keep your home. We are specialists in assisting people to keep their home. It can be a challenging process, so if you are concerned about losing your home, contact us on 1300 339 604 and we will guide you through your options.

One of the most common barriers preventing people from declaring Bankruptcy is the thought of losing the family home. We often meet people who have suffered severe financial pressure for years so they don’t lose their house.

So how is it possible to keep your home, when declaring bankruptcy? Easy, really; it’s a matter of equity – if you own a home that is actually worth $750,000 and you owe the bank $750,000 you essentially have no equity in the house. The trustee will only sell your home if there is unquestionably enough equity to repay a lot of your debts. So, in this situation, the trustee will offer you some solutions. One of these solutions is to just simply go on paying the mortgage and live in your house while you are bankrupt.

So how can I estimate the value of my home before I go through the process and pain of declaring bankruptcy? A simple way is to go onto www.realestate.com.au and take a look at the sold properties tab for your area and all the recent sales in your suburb will be displayed. Another option is to have a registered valuer complete a valuation on your home, not a real estate agent (unless if they are registered valuers). This will cost you anywhere between $300-700. Just another thing about house prices – If the trustee has to sell your house they do this reasonably quickly. It is definitely not a 6-month glossy advertising program and instead it’s usually by auction and they simply meet the market on the day and that is generally it. So when thinking of the value remember that it’s a sell now price, not when the market improves.

Once you understand the market value of your home the next thing to consider is who owns the house.

Many home loans are between a couple of individuals as joint tenants who both contribute to the home loan. If only one party is declaring bankruptcy, then the equity is calculated in this manner:

Let’s assume your home is worth $750,000 and the latest market value is $7000,000 – the balance of equity in the property is $50,000. Fifty percent of that complete equity is assigned to the person not declaring bankruptcy, leaving $25,000 for the bankrupt. Out of this $25,000 the declaring bankruptcy party needs to pay for all of the selling costs including advertising etc. Depending upon where you live, these costs could be anywhere between $12,000-20 ,000. In this particular situation, say the selling expenses are going to be $15,000 – then the remaining left over after the sale is $10,000. So in this case the trustee will offer the non-declaring bankruptcy party a few options. One of which is common is for the bank to say, “Pay us the $10,000 and we will not sell the house and you will have it eliminated as an asset from the bankrupt’s estate.” Or simply put, negotiate a deal to pay the $10,000 and you can keep the house.

Of course, the bank who you have the home loan with will need the repayments to be continued. No matter what the trustee chooses, if you do not pay the bank the property loan repayments, they will ultimately ask you to leave. Therefore, keeping your home implies keeping the mortgage as well.

There are several other alternatives when it comes to your home when declaring bankruptcy and we have only described one of probably 20 options. We know you will want to get this right. Trying your luck with the family home could be a devastating choice. If you intend to get the best advice about filing for bankruptcy or you would just like to speak with someone call Bankruptcy Solutions on 1300 339 604.

What happens to my credit rating?

Bankruptcy takes 3 years and is will remain on your credit file for that time. However, as with any default it will show on your credit file for 7 years. You can have it removed if you get your bankruptcy annulled.

Will I ever have the capacity to borrow again after I’m bankrupt?

It is not likely you will get a loan during the 3 years of your Bankruptcy. You may have the ability to borrow after the 3 years but you just won’t be able to get the very best interest rate. Your credit file will be wiped clean 4 years after you have been dismissed as a bankrupt and you will then you have an ideal credit history and access to the most competitive loan deals.

Will I forfeit my car when declaring bankruptcy?

Often, no. Bankrupts rarely lose their cars because they’ve filed for bankruptcy. Of course, this is granted on certain terms and we can let you know if your car is safe. How is this worked out? Well it is calculated based upon a threshold market value for your car. The threshold is the maximum wholesale value your car could be worth, which is $8,000. You will find all sorts of misinformation about this online but these are the facts: That $8,000 represents equity – not the total value. So if you have a car worth $35,000 you are repaying or leasing and the amount you could possibly sell it for is $30,000 then you can keep your car because its equity is only $5,000. Even though you are Bankrupt, the lender that offered you the loan for the car will allow you to retain the vehicle. Call Bankruptcy Solutions 1300 339 604 to discuss your circumstances.

Can I continue go bankrupt if I am overdue on my car repayments?

Get some advice on this one. Basically, you will receive about 2 – 3 payments grace when it comes to car loans. The bottom line is straightforward: whether you are declaring bankruptcy or not, the car will generally be repossessed if you miss 3 or more repayments on your loan. Don’t assume because you are declaring bankruptcy you are automatically going to lose your car because a lot of the time we help people retain them. If you are considering declaring bankruptcy and need advice call Bankruptcy Solutions on 1300 339 604.

When are the creditors advised of my bankruptcy?

The creditors, or the people you owe money to, are advised in writing around the same time you receive your bankruptcy file number.

Will anyone come to my home?

No. The process of declaring bankruptcy is simply a paperwork exercise. You will be sent a letter by mail or email advising you that you are bankrupt. At Bankruptcy Solutions, we make sure that this entire process is that simple, so if you have any questions call us on 1300 339 604.

What should I do if someone is bankrupting me?

If you owe money to a lender they can get a court order and even bankrupt you. They will need to follow a process but it is possible. To avoid attending court and difficult phone calls, it is always best to voluntarily file for bankruptcy and avoid other people bankrupting you at all costs.

Can I still go bankrupt if my business has received a Demand or Wind-Up notice?

You can, however this is generally a complicated process and we recommend you get some expert advice before declaring bankruptcy. Call Bankruptcy Solutions on 1300 818 575 for free consultation.

Do I need to contact my creditors?

No, we do that for you. We work as a mediator between you and your creditors, so you are not obligated to advise them of your bankruptcy – Bankruptcy Solutions take care of that for you.

How long does bankruptcy last?

An individual remains bankrupt for 3 years and five years

Just how long does it take to file for bankruptcy?

Typically, it takes around 2 weeks.

How long does it take to file for bankruptcy?

The process to file for bankruptcy usually takes around 2 weeks.

Supposing another person signed for a loan (joint loan or guarantor) and I go bankrupt; will they still be liable for the debt?

Yes. A lender will generally pursue the other party that signed the loan papers with you for the total of the remaining amount owing on the loan.

What happens to a debt I forgot at the time of becoming bankrupt?

If you neglected a debt and remember it afterwards, contact your trustee with the name of the creditor, address, date the debt was incurred, amount of debt and any account or reference number/s supplied by the lender. Your trustee will then add the creditor to your bankruptcy and send a notification to the creditor.

Do I need to attend court if I declare bankruptcy?

No, Bankruptcy Solutions will deal with the entire process for you.

What happens if I have gambled a part of my income and I go bankrupt; will I get in trouble?

This is not generally a problem, so don’t worry if you are a regular gambler. What the trustee will not appreciate here is inconsistency – if you have never gambled in your life and all of a sudden you lost $50,000 on the horses, then you may have some explaining to do because it just does not add up and appears suspicious.

Can my bankruptcy be carried out over the phone?

Yes, if you have a phone we can support you – simply call us on 1300 339 604.

What happens if I’m staying in a different country; can I still declare bankruptcy?

Yes, this is possible. It will involve some emails back and forth but it can be done.

Can I include my overseas unpaid debts in my bankruptcy?

Yes. In the event that a person actually living in a different country is now residing in Australia then files for bankruptcy and they have a debt incurred in that foreign country, you just note that debt on the documentation.

Most of the time the overseas creditor will wipe the debt. However, it is entirely possible and legal for them to deny your application and if you return to that country, you may be required to go through their bankruptcy laws.

How will the trustee know exactly what assets I possess?

There are a few ways the trustee can learn of assets and the easiest and most effective way is for you to let them find out when we complete the documents. There is also a government web page that has primary assets listed. You should certainly take care and get some advice about declaring assets.

Can I keep an inheritance if I file for bankruptcy?

This is complicated question and you are going to need the right advice, so if you need more information regarding inheritances call us on 1300 339 604.

Will I have to give up my Pension or Workers Compensation payments if I go bankrupt?

No – the income thresholds are the same for every person so regardless of the source of income, you would need to earn approximately $55,000 per year before your income is affected by bankruptcy.

Can I keep my tax refund when I’m bankrupt?

If you do not have any tax debts, you can keep refunds from tax returns. If you owed money to the Tax Office when you went bankrupt, they will retain your tax refund and offset it against the debt. The explanation for this is simply because your income tax return is considered as net income, so if you are below the threshold amount you can earn while bankrupt and provided you didn’t have those various other debts, you will receive your entire tax refund.

What about Child Support?

If you are required to pay child support, this amount will be deducted from your net income. So what you have the ability to keep after you deduct tax and child support is considered net income. This is why net income figures are always quoted when declaring bankruptcy.

Can I buy shares and make investments while I’m bankrupt?

Yes but it is not a great idea! Although you are permitted to purchase shares and make investments, even while declaring bankruptcy, the Trustee will take them off you because they are regarded as an asset.

What possessions can I keep if I go bankrupt?

When filing for bankruptcy you can keep almost everything except high value assets like houses, cars, shares and inheritances, although some of these assets may be able to be saved. Call Bankruptcy Solutions on 1300 339 604 before you make any rash decisions.

 

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