If you are having difficulties managing your personal debts, bankruptcy may be the best option for you to move on.
Bankruptcy is a legal process that is in force for a period of three years and one day and may be commenced voluntarily via a process called a ‘debtor’s petition’.
Upon entry into bankruptcy, you are discharged from all of your liabilities, except for court imposed penalties, child support and maintenance debts, HECS and HELP liabilities and debts you incur after your bankruptcy commences.
During the term of bankruptcy, the following considerations and restrictions apply:
- Your divisible property (i.e. your assets) is made available to the creditors of your estate; however you are usually able to retain some cash at bank (currently $2,300), your necessary household furniture and effects, equity in a motor vehicle valued to the statutory limit (currently $7,800) and tools of trade valued to the statutory limit (currently $3,700)
- You may be liable to make income contributions during the term of your bankruptcy, depending on your level of income and whether you have any dependents
- You will need the consent of your Trustee in Bankruptcy before travelling internationally
- If you receive an inheritance or win lotto during your bankruptcy, these assets and funds are made available to your creditors
- Your name will appear permanently on the National Personal Insolvency Index
Despite the negative stigma associated with bankruptcy, the process is a way for an individual to move forward free of the stress and pressures associated with unmanageable debt.
For more information on bankruptcy, please see the following information links prepared by the Australian Financial Security Authority:
To speak with us further regrading whether Bankruptcy may be appropriate in your situation, please contact us on 08 9215 7900 for a cost and obligation free consultation.
Please visit our Frequently Asked Questions page here for further information regarding bankruptcy.
Bankruptcy may be avoided if you are in a position to present a Personal Insolvency Agreement to your creditors. For more information, please click here.