When it comes to Going Bankrupt Melbourne, often people aren’t aware that there are both voluntary, and involuntary bankruptcy – both have unique methods and rules.
Involuntary bankruptcy takes place when someone you owe money to applies to the court to declare you bankrupt. Generally when you get one of those notices, you have normally 21 days to pay all the debt. If you do not, then the creditor returns to the court and asks the court to issue a sequestration order that declares you bankrupt. A trustee is appointed, and then you have 14 days to get the documentation in and then you are bankrupt.
You can contest a bankruptcy notice by going to court right after the 21 days have expired and put your case forward, to avoid it going to the next level. Apart from the way you became bankrupt there is in fact no distinction between Involuntary Bankruptcy and or Voluntary Bankruptcy – once you are simply declared bankrupt, they’re administered to in the same way.
However, when it comes to Going Bankrupt for this, the stress, 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 guidance and act on that advice. Generally I’ve found it’s always far better to know what you can and can’t do before you have someone bankrupt you. Once you are bankrupt, it’s generally far too late.
Nevertheless, when it comes to Going Bankrupt, sometimes there are times that it is the most ideal option. So you may want to ask yourself, ‘when should I consider voluntary Bankruptcy?’.
This question is not the very same for every person of course, but commonly I find that one way you could work it out is to figure out just 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 Going Bankrupt.
Once, I had an 80 year old pensioner, who spoke to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the level she was paying off her account, and it was 35 years! Imagine 35 years for one credit card bill.
Credit rating damage can really help you think this through. If you move house and forget to pay your $30 phone bill for 6 months more, it’s very likely the telephone company 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 affect how you have to approach Going Bankrupt.
In many ways, the ease with which companies/credit providers can default your credit file is unfair. The punishment doesn’t seem to equate to the crime in my book. So if you actually 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 issue in trying to decide whether to participate in 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 variation is that with a DA or PIA you pay back the money and still have it on your file for 7 years.
I have mentioned 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 review their financial situation and Going Bankrupt. 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 finished with no strings attached. Compared with countries like the United States, our bankruptcy laws are quite generous.
I don’t pretend to know why that is but a few hundred years ago debtors went to prison. These days I suppose the government thinks 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 costs the taxpayer anyway.
Bankruptcy wipes all 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 insured.
There is a lot more that can be said about this and Going Bankrupt in general but the purpose of this blog was to help you decide between a few available options. When getting some advice, bear in mind that there are always options when it relates to Going Bankrupt in Melbourne, so do some study, and Good luck!
If you wish to learn more about exactly what to do, where to turn and what questions to ask about Going Bankrupt, then don’t hesitate to speak to Fresh Start Solutions Melbourne on 1300 818 575, or visit our website: bankruptcymelbourne.com