Bankruptcy in Canberra - does it matter if it is voluntary?

When it comes to Bankruptcy Canberra, typically people aren't aware that there can be both voluntary, and involuntary bankruptcy - each have unique methods and rules.

Involuntary bankruptcy arises when somebody you owe money to applies to the court to declare you bankrupt. Commonly when you get one of these particular notices, you have normally 21 days to pay all the debt. If you don't, then the creditor goes back to the court and requests the court to issue a sequestration order that declares you bankrupt. A trustee is assigned, and then you have 14 days to get the documentation in then afterwards you are bankrupt.

You can object to a bankruptcy notice by going to court following the 21 days have expired and put your case forward, to avoid it going to the next level. Other than the way you became bankrupt there is in reality no distinction between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are simply declared bankrupt, they're conducted to in the same way.

However, when it concerns Bankruptcy for this, the stress and anxiety, 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 advice and act on that advice. Generally I've found it's always much better to know what you can and can't do before you have somebody bankrupt you. Once you are bankrupt, it's generally too late.

Voluntary Bankruptcy

On the other hand, when it comes to Bankruptcy, sometimes there are times that it is the most effective option. So you may need to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the same for everyone of course, but typically I find that one way you could work it out is to figure out 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 came to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the rate she was paying her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can help you think this through. If you move house and fail to remember to pay your $30 phone bill for 6 months more, it's very likely the phone service 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 impact how you have to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is unreasonable. The punishment doesn't seem to amount to the crime in my book. So if you currently 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 aspect in trying to decide whether to enter into 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 difference is that with a DA or PIA you repay the money and nevertheless have it on your file for 7 years.

Bankruptcy

I have stated 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 discuss 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 over with no strings attached. As compared to countries like the United States, our bankruptcy laws are extremely good.

I don't claim to know why that is but a few hundred years ago debtors went to prison. These days I suppose the government feels 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 in turn costs the taxpayer anyway.

Bankruptcy wipes every one 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 actually insured.

There is much more that can be said about doing this and Bankruptcy in general but the purpose of this blog was to help you decide between a few possible options. When getting some advice, remember that there are always options when it involves Bankruptcy in Canberra, so do some homework, and Good luck!

If you want to find out more about exactly what to do, where to turn and what questions to ask about Bankruptcy, then feel free to consult with Fresh Start Solutions Canberra on 1300 818 575, or visit our website: freshstartsolutions.com.au/bankruptcy-Canberra