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
1. Will my income be affected by bankruptcy?
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.
2. I am (or have been) a sole trader/company owner. How will bankruptcy affect me?
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.
3. Can I keep my house?
Can I Keep My House?
How much equity is in your property?
If you have no equity in your property, the Trustee will not sell your house to pay off the debt you owe.
So if you owe $500,000 of a $500,000 mortgage, you may be able to stay in your house (provided you can keep up with mortgage and other payments).
If you have, for example, $300,000 of equity in your property, it may be sold by the Trustee to pay your debt.
When it comes to joint ownership of a property, the rules are slightly different, and I’ll address this in a separate video.
So give us a call and get clear on your specific situation.
4. Can I keep my vehicle?
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.
5. Will I ever be able to get another loan?
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.
6. Am I allowed to leave the country?
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).
7. Will my superannuation be affected?
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.
8. I have more complicated question not answered here, how can I have this resolved?
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.
9. Can I travel overseas when declaring Bankruptcy?
Can I Travel Overseas When Declaring Bankruptcy?
If you stick to the rules of bankruptcy, you can travel overseas.
You’ll most likely need to fill out an online form, answer a few questions about where you’re going and how you’ll pay for the ticket, pay the Trustee $150 and wait for their response.
If you adhere to the terms outlined in your bankruptcy agreement, there’s no reason you shouldn’t be able to travel.
Answering any questions
Providing any info requested and
Staying in touch with your Trustee.
There are a few situations that aren’t so straightforward, however, so if you’d like to be clear on where you stand, speak to one our our experts today.
If you’d like further assistance or clarification Please call 1300 339 604
10. Can I keep my home when declaring Bankruptcy?
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.
11. What happens to my credit rating?
What Happens To My Credit Rating?
Many people believe that once you’ve gone bankrupt, your credit rating will be permanently damaged.
This is not the case.
Your credit file lasts for only 5 years.
Bankruptcy lasts for three years, and during this three year bankruptcy period you won’t be able to get a loan.
After the three years, however, you’ll then be classed as ‘Discharged Bankrupt’, and you’ll be able to get loans for secured assets, such as cars and homes.
Your rate of credit may not be the very best, but this will only be for two years.
After the two years are up, your credit rating will be clean again, and you’ll be able to get credit cards, overdrafts, and any other type of loan once again.
If you’d like further assistance or clarification Please call 1300 339 604
12. Will I ever have the capacity to borrow again after I’m bankrupt?
Will I Ever Have The Capacity To Borrow Again After I’m Bankrupt?
After the 3 year bankruptcy is over, you’ll be able to get secured loans (a car or home loan, for example).
Once 5 years has passed (so 3 years of bankruptcy plus 2 as ‘Discharged Bankrupt’), you’ll be able to start again with a clean credit file. If you’d like further assistance or clarification Please call 1300 339 604
13. Will I forfeit my car when declaring bankruptcy?
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.
14. Can I continue go bankrupt if I am overdue on my car repayments?
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.
15. When are the creditors advised of my bankruptcy?
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.
16. Will anyone come to my home?
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.
17. What should I do if someone is bankrupting me?
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.
18. Can I still go bankrupt if my business has received a Demand or Wind-Up notice?
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.
19. Do I need to contact my creditors?
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.
20. How long does bankruptcy last?
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.
21. How long does it take to file for bankruptcy?
How Long Does It Take To File For Bankruptcy?
The process to file for bankruptcy usually takes around 2 weeks.
22. Supposing another person signed for a loan (joint loan or guarantor) and I go bankrupt; will they still be liable for the debt?
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.
23. What happens to a debt I forgot at the time of becoming bankrupt?
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.
24. Do I need to attend court if I declare bankruptcy?
Do I Need To Attend Court If I Declare Bankruptcy?
No, Bankruptcy Solutions will deal with the entire process for you.
25. What happens if I have gambled a part of my income and I go bankrupt; will I get in trouble?
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.
26. Can my bankruptcy be carried out over the phone?
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.
27. What happens if I’m staying in a different country; can I still declare bankruptcy?
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.
28. Can I include my overseas unpaid debts in my bankruptcy?
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.
29. How will the trustee know exactly what assets I possess?
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.
30. Can I keep an inheritance if I file for bankruptcy?
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.
31. Will I have to give up my Pension or Workers Compensation payments if I go bankrupt?
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.
32. Can I keep my tax refund when I’m bankrupt?
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.
33. What about Child Support?
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.
34. Can I buy shares and make investments while I’m bankrupt?
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.
35. What possessions can I keep if I go bankrupt?
Will My Incom Be Affected By Bankruptcy?
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.
36. How long before a debt is written off in Australia?
How Long Before A Debt Is Written Off In Australia?
Here at Bankruptcy Solutions we get asked all the time this kind of question; My debts are so old maybe if I just wait long enough they will just disappear?
This is a question of debt recovery time limits.
With each month that passes, it becomes harder for the creditor to recoup the debt.
Figures from a recent study state that a debt overdue by just one month has a 93.8% chance of being paid, but this percentage drops to 74% after 3 months and down to 27% after a year.
There’s every chance that a company may write off a debt and claim it as a tax write-off.
But this is by no means a get-out-of-jail-free card. As always, it’s best to seek professional advice and find out where you stand, and your best course of action.
How long before a debt is written off in Australia?
If someone’s hounding you for repayment of a debt, firstly find out if there’s been any legal action taken against you. In some cases, the creditor will sell the debt to a collection agency to pursue you for the debt, companies such as Credit Corp and Dun & Bradstreet to name a few.
If the debt is more than 6 years since you first owed the debt then the creditor can no longer pursue you for the debt?
However, if it’s been over 6 years, the creditor may not be able to enforce the debt against you, providing of course you have taken absolutely no action on that debt during that six years. If you have lived overseas for example for many years and or moved and forgot all about the debt and the creditor couldn’t find you then you should be ok.
But once you admit to owing the debt (by starting to make repayments or even putting a repayment plan in place), then the 6-year debt collection limit can restart.
Statute of Limitations
In legal terms, a creditor has 6 years to collect their debt (from the date due, the last payment made, or when the debt was admitted to in writing). However, there are exceptions – the court can issue a judgement that extends this limit to 12, or 15 years in some states.
After the limitation period is up, the creditor no longer has the right to sue for recovery of the debt – it becomes statute-barred.
Once a debt has been statute-barred, all the creditor can do is ask for payment. If the debtor writes to the creditor denying liability on a statute-barred debt, the creditor may be legally obliged to stop all debt-collection attempts.
For more info on the statute of limitations and debt collection in your state, read this 2005 ASIC report.
Find out your options, If you’ve got a debt that’s hanging over your head, find out what your options are first – you may be eligible to have the debt written off. If you have an old debt or just a very painful debt feel free to call us here at Bankruptcy Solutions 1300 339 604.
Some people choose to get a copy of their credit file to find out exactly what debts they owe, this is a pretty good option but remember sometimes this file doesn’t show all of your debts unless the creditor has registered the debt with Equifax then it’s quite possible its not recorded on your credit report. Find out more about debts and bankruptcy in Australia….
One of the major pluses of bankruptcy, if you choose to walk that path, is that all debts known or unknown will be written off and you will get a fresh start. Don’t worry if you don’t know what debts you have at the time you file for bankruptcy, even if that debt shows up 2 years into it we can still add it onto your bankruptcy and you won’t have to pay the debt.
If you need to know more about your debts feel free to call us here at Bankruptcy Solutions 1300 339 604.
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