Frequently Asked Questions
If you can not find the answer to a specific question, please reach out to us, where a consultant will personally answer your question.
Remember this is an obligation free services.
Remember this is an obligation free services.
Which debts does bankruptcy cover?
Unsecured debts, such as:
- Credit and store cards
- Unsecured personal loans and pay day loans
- Gas, electricity, phone and internet bills
- Overdrawn bank accounts and unpaid rent
- Medical, legal & accounting fees.
- Australian Taxation Office debts
- Mortgage (house is security)
- Car loan (car is security)
- Hire purchase or rent to buy (eg. furniture or electronics as security).
Which Debts does Bankruptcy doesn't cover ?
- Court imposed penalties and fines
- Child support & maintenance
- HECS & HELP debts (government student loans)
- Debts you incur after your bankruptcy begins
- Unliquidated debts (e.g. a debt where you and your creditor are yet to determine the amount). We can assist you with unliquidated debts.
Overseas debts
Debts you incur overseas are covered in your Australian bankruptcy. This means your creditors can't pursue for that debt in Australia.
However, your overseas creditors can pursue you for the debt if you travel back to that country.
However, your overseas creditors can pursue you for the debt if you travel back to that country.
Stopping Direct debits
It is best to speak to your bank directly if you want to stop a direct debit.
How Often Can I file for bankruptcy ?
There is no limit to the amount of times you can declare bankruptcy.
Can I keep my house if I file bankruptcy?
When you become bankrupt, your trustee becomes the owner of your share of any house or property that you own.
This means your trustee now has control over the property and can sell it to help pay your debts.
This means your trustee now has control over the property and can sell it to help pay your debts.
Is there a minimum amount I need to owe before I can go Bankrupt?
No. You can become bankrupt voluntarily owing any amount.
Can I Travel overseas?
If you're travelling, or moving overseas you must seek approval from your trustee. We have not yet had a refusal.
My Income ?
There is a protected threshold amount which is yours to keep.
Currently this amount is $1,112.82 after tax per week for a person with no dependants. Yearly after tax $ 57,866.90.
The more dependants you have the higher the threshold (protected amount).
With 2 Dependants the amount is $ $1,1413.28 after tax per week . Yearly after tax $ 73,490.96.
If you need to go bankrupt and you are worried about income call us and we will explain how it will affect you.
Currently this amount is $1,112.82 after tax per week for a person with no dependants. Yearly after tax $ 57,866.90.
The more dependants you have the higher the threshold (protected amount).
With 2 Dependants the amount is $ $1,1413.28 after tax per week . Yearly after tax $ 73,490.96.
If you need to go bankrupt and you are worried about income call us and we will explain how it will affect you.
My Car ?
What happens to your car ?
So that means that you finish paying off the car during the 3 years of your bankruptcy and it is then valued at more than the $7,900.00 threshold.
- If you are the owner of the car and have no loan against it, the value of you car can not exceed $7,900.00.
- If you own the car with your partner or somebody else the threshold doubles to $15,600.00.
- If your car is leased or is collateral for a loan the value of the car now does not matter as long as you can afford to (and want to) continue your loan repayments and your equity in the car is not more than $7,900.
So that means that you finish paying off the car during the 3 years of your bankruptcy and it is then valued at more than the $7,900.00 threshold.
Can i still run a business ?
You can trade under an ABN number.
You can not be Director of a Company.
You can not be Director of a Company.
WHAT DOES A BANKRUPTCY TRUSTEE DO ?
The Trustee oversees your financial affairs for the term of your bankruptcy.
The thing to note about this is that most people who go bankrupt never speak to their Trustee nor does their Trustee have any real involvement in their lives.
The thing to note about this is that most people who go bankrupt never speak to their Trustee nor does their Trustee have any real involvement in their lives.
DO I HAVE TO FILE BANKRUPTCY WITH MY SPOUSE / PARTNER ?
No. Just because you declare bankruptcy it doesn’t mean that your spouse / partner has to or will even be affected.
WILL MY EMPLOYER FIND OUT IF I FILE BANKRUPTCY ?
No one will have to find out about it except who you choose to tell.
You don’t have to tell your employer unless it is conditional upon your employment.
You don’t have to tell your employer unless it is conditional upon your employment.
WILL MY CREDIT FILE BE EFFECTED ?
Your credit file will be marked for a period of five years.
DO I HAVE TO INCLUDE ALL MY DEBTS WHEN I FILE BANKRUPTCY ?
Yes. You are obligated to include all of your debts.
CAN BANKRUPTCY STOP WAGE GARNISHMENTS ?
Yes. As soon as you are bankrupt the law stops the garnishee.
An exception is if the Australian Taxation Office (ATO) issues a garnishee order against you before your bankruptcy starts. This allows the ATO to garnish your wages during bankruptcy to offset any debt to them.
Note: This only applies if the ATO has a statutory garnishee notice (under s260-5 of Schedule 1 of the Taxation Administration Act 1953).
An exception is if the Australian Taxation Office (ATO) issues a garnishee order against you before your bankruptcy starts. This allows the ATO to garnish your wages during bankruptcy to offset any debt to them.
Note: This only applies if the ATO has a statutory garnishee notice (under s260-5 of Schedule 1 of the Taxation Administration Act 1953).
WHAT ASSETS CAN I KEEP ?
Generally you get to keep your
- Household items.
- Furniture.
- Car up to a certain value.
- Tools of trade up to a certain value.
CAN I ADD DEBTS THAT I FORGOT TO INCLUDE WHEN I WENT BANKRUPT ?
Yes.
MY TAX REFUND ?
It depends if you owe the tax office money.
If you do they will keep your tax refunds during your bankruptcy until you are discharged from your bankruptcy.
When you go bankrupt if you have outstanding tax returns to do then those refunds may go to your trustee.
If you do they will keep your tax refunds during your bankruptcy until you are discharged from your bankruptcy.
When you go bankrupt if you have outstanding tax returns to do then those refunds may go to your trustee.
HOW LONG I`M I BANKRUPT FOR ?
Normally 3 years and 1 day.
EMPLOYMENT RESTRICTIONS
Professional bodies and/or trade associations have certain conditions of membership for the duration of a bankruptcy.
There may be restrictions on holding some statutory positions during this period.
Consumers should contact the relevant peak body of their trade or profession to see if there are any restrictions during and/or after bankruptcy.
There may be restrictions on holding some statutory positions during this period.
Consumers should contact the relevant peak body of their trade or profession to see if there are any restrictions during and/or after bankruptcy.
IS THERE A MINIMUM AMOUNT I NEED TO OWE BEFORE I CAN GO BANKRUPT?
No. You can become bankrupt voluntarily owing any amount. A creditor however cannot make you bankrupt unless the debt you owe is $5,000 or more.
WHAT IF MY HOUSE IS MORTGAGED?
The trustee has to deal with any equity or interest you have in a property for the benefit of your creditors.
This may mean that the property has to be sold.
If the property is jointly owned the trustee may consider selling his interest in your property to a non-bankrupt joint owner.
Alternatively the joint owner provided they are not bankrupt may make an offer to purchase the trustees interest in the property.
This may mean that the property has to be sold.
If the property is jointly owned the trustee may consider selling his interest in your property to a non-bankrupt joint owner.
Alternatively the joint owner provided they are not bankrupt may make an offer to purchase the trustees interest in the property.
WHAT HAPPENS IF SOMEONE ELSE ALSO SIGNED THE LOAN AGREEMENT?
WILL THEY HAVE TO PAY IF I DECLARE MYSELF BANKRUPT?
WILL THEY HAVE TO PAY IF I DECLARE MYSELF BANKRUPT?
Yes. They will still have a liability for the total amount outstanding on all debts incurred in joint names.
WHAT ABOUT DEBTS INCURRED AFTER BANKRUPTCY?
You will be responsible for any debts incurred by you after bankruptcy.
CAN A CREDITOR STILL CONTACT ME INSISTING ON PAYMENT ONCE I HAVE BECOME BANKRUPT?
No.
The Bankruptcy Act prevents creditors from recovering money from you.
An exception is a secured creditor with whom you have made arrangements to retain secured property.
The Bankruptcy Act prevents creditors from recovering money from you.
An exception is a secured creditor with whom you have made arrangements to retain secured property.
CAN MY BANKRUPTCY BE CANCELLED OR ANNULLED?
Yes. If you strive to pay your debts and an administration fee your bankruptcy may be annulled.
TRANSFER OF ASSETS PRIOR TO BANKRUPTCY
The trustee has considerable powers to claim back property or money that the bankrupt may have transferred to others in order to avoid it falling into the hands of creditors. This is an offence under the Bankruptcy Act and the trustee’s powers can include recovering assets that were transferred up to 5 years before the bankruptcy. Similar powers exist to claim back payments to creditors who may have had their debts paid in preference to other creditors shortly before the bankruptcy.
LOAN (S) IN JOINT NAMES ?
If one party declares him or herself bankrupt then the other party will still have a liability for the total outstanding amount that is incurred in their joint names.
SECURED DEBTS ?
A secured debt is a debt secured by an asset, such as a bill of sale over a car.
This entitles the secured creditor to recover the property and sell it if you fall behind in payments.
The lender of the car loan, as a creditor, may claim and re-sell your car and if this does not cover the amount of the debt then the creditor is entitled to lodge a claim in the bankruptcy for any loss incurred.
This entitles the secured creditor to recover the property and sell it if you fall behind in payments.
The lender of the car loan, as a creditor, may claim and re-sell your car and if this does not cover the amount of the debt then the creditor is entitled to lodge a claim in the bankruptcy for any loss incurred.
IF I HAVE TO PAY CONTRIBUTIONS, HOW MUCH WILL I HAVE TO PAY?
You will be required to pay one half of the amount by which your after-tax income exceeds the prescribed threshold* amount ie 50 cents of every $1 of the excess amount.
Is there a difference between an involuntary and a voluntary bankruptcy?
The outcome and consequences are the same for someone who voluntarily petitions for bankruptcy and someone who is made bankrupt by a creditor.
The one exception is that a person made bankrupt by a court order must file a statement of affairs within 14 days of being notified of their bankruptcy – and they are not released from bankruptcy if they do not file their statement of affairs.
The one exception is that a person made bankrupt by a court order must file a statement of affairs within 14 days of being notified of their bankruptcy – and they are not released from bankruptcy if they do not file their statement of affairs.
What is the role of a trustee?
A trustee is appointed to administer the bankruptcy. The duties of a trustee are specified in legislation and trustees have to adhere to certain standards while administering your estate. In order to pay creditors, your trustee will:
• sell your assets, including those you acquire or become entitled to during your bankruptcy (although you will be able to keep certain types of assets)
• recover any income you earn over a certain limit
• investigate your financial affairs and may, in certain circumstances, recover property that you have transferred to someone else prior to your bankruptcy.
ou can choose to appoint a registered trustee by obtaining and providing their consent when you lodge your petition to become bankrupt. If you do not choose a trustee, AFSA becomes your trustee and may arrange for a registered trustee to be appointed. Otherwise, AFSA is initially appointed to administer your estate. Your creditors may choose to change the trustee at any time.
If you are made bankrupt involuntarily, the court will appoint a trustee at the time of making the sequestration order. Regardless of whether you have been made bankrupt voluntarily (debtor’s petition) or involuntarily
• sell your assets, including those you acquire or become entitled to during your bankruptcy (although you will be able to keep certain types of assets)
• recover any income you earn over a certain limit
• investigate your financial affairs and may, in certain circumstances, recover property that you have transferred to someone else prior to your bankruptcy.
ou can choose to appoint a registered trustee by obtaining and providing their consent when you lodge your petition to become bankrupt. If you do not choose a trustee, AFSA becomes your trustee and may arrange for a registered trustee to be appointed. Otherwise, AFSA is initially appointed to administer your estate. Your creditors may choose to change the trustee at any time.
If you are made bankrupt involuntarily, the court will appoint a trustee at the time of making the sequestration order. Regardless of whether you have been made bankrupt voluntarily (debtor’s petition) or involuntarily
What assets may I keep?
The Bankruptcy Act allows bankrupts to keep certain assets.
These include:
• most ordinary household items
• tools used to earn an income up to a certain limit*
• vehicles (eg cars or motorbikes) where the total value of the vehicles minus the sum owing under finance is no more than a certain limit*
• most balances in regulated superannuation funds and payments from regulated superannuation funds received on or after your date of bankruptcy (superannuation payments received before you go bankrupt are not protected)
• life insurance policies for you or your spouse, and the proceeds from these policies received after your bankruptcy
• compensation for a personal injury, such as an injury to you from a car accident or workers’ compensation (whether received before or after the date of bankruptcy), and assets bought wholly or substantially with such compensation
• assets held by you in trust for another person (for example, a child’s bank account)
• if creditors agree, awards of a sporting, cultural, military or academic nature made to you, such as medals or trophies, and claimed as having sentimental value.
These include:
• most ordinary household items
• tools used to earn an income up to a certain limit*
• vehicles (eg cars or motorbikes) where the total value of the vehicles minus the sum owing under finance is no more than a certain limit*
• most balances in regulated superannuation funds and payments from regulated superannuation funds received on or after your date of bankruptcy (superannuation payments received before you go bankrupt are not protected)
• life insurance policies for you or your spouse, and the proceeds from these policies received after your bankruptcy
• compensation for a personal injury, such as an injury to you from a car accident or workers’ compensation (whether received before or after the date of bankruptcy), and assets bought wholly or substantially with such compensation
• assets held by you in trust for another person (for example, a child’s bank account)
• if creditors agree, awards of a sporting, cultural, military or academic nature made to you, such as medals or trophies, and claimed as having sentimental value.
can anyone come back and claim money after your bankrupt ?
All unsecured debt are included in the bankruptcy, the date that a person goes bankrupt is what is important. From that date forwards you are responsible for any new debts. However any debts prior your bankruptcy is covered by the bankruptcy. The only debt not included are;
Child Support Payments, Hecs / Help fees, Court Imposed fines, amounts acquired by fraud and payments to secured creditors. Example to a mortgage.
Child Support Payments, Hecs / Help fees, Court Imposed fines, amounts acquired by fraud and payments to secured creditors. Example to a mortgage.