Bankruptcy Advice to Help Navigate Debt
Before deciding to declare bankruptcy, it’s highly recommended that individuals seek bankruptcy advice from financial professionals. Being bankrupt can have serious consequences that should be well understood before a decision is made.
Bankruptcy is a legal process that occurs as a result of an individual being unable to pay their debts. While bankruptcy certainly has negative connotations, the process is designed to release an individual from their debts, enabling them to make a fresh start.
Bankruptcy can be entered into voluntarily or by order of the court, which is also known as a sequestration order. A sequestration order will be issued if creditors take the bankrupt individual to court and demand payment.
The term bankruptcy is only used to describe individuals; businesses that fail to pay back their debts are described as being insolvent.
Before deciding to declare bankruptcy, it’s highly recommended that individuals seekábankruptcy advice from financial professionals. Being bankrupt can have serious consequences that should be well understood before a decision is made.
Bankruptcy: an overview
¤ In exchange for giving up control over your finances and assets, you will obtain legal protection from creditors.
How does bankruptcy work?
¤ They are unable to pay their debts.
There is no minimum or maximum amount of debt that needs to be met to apply for bankruptcy.
To apply for bankruptcy in Australia, you need to complete and submit a Bankruptcy Form with the Australian Financial Services Authority (AFSA). It’s important to note that once bankruptcy has been approved, it cannot be reversed or cancelled. Before applying for bankruptcy, it is highly recommended that individuals seek out expert bankruptcy advice and consider the full consequences of their decision.
You can either nominate a Registered Trustee to administer your bankruptcy or if you do not nominate a Registered Trustee, The Official Trustee (at AFSA) will administer your bankruptcy. If you do not nominate a Trustee and the Official Trustee is appointed, the Official Trustee may transfer your estate to a Registered Trustee if it considers your estate would be better managed by a Registered Trustee. After accepting the bankruptcy application, the trustee will monitor and guide the process.
The trustee will manage all financial issues, including:
¤ Communicating with creditors and evaluating their claims
When you are discharged from bankruptcy, you will be released from your debts. However, your state of being bankrupt will feature in your credit history for at least five years. It will also be permanently recorded on the National PersonaláInsolvency Index, which is a public record of companies or persons who have gone bankrupt.
Tips for avoiding bankruptcy
¤ Make a budget: Identify your major expenses and avenues through which you can cut costs.
If you are struggling to pay back debts, bankruptcy is not necessarily your only option. Before making any drastic decisions, be sure to seek out an expert and qualified insolvency practitioner, who will be able to provide bankruptcy advice and come up with a solution that is tailored to your circumstances.
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Marta Jordan is a professional writer & blogger, who writes for a variety of online publications and loves working with words of all shapes and sizes. When not working, either I am glued to my playlist, Netflix, books or you can find me splurging on myself.