Although the decision to file for bankruptcy should never be taken lightly, for those who are experiencing their own personal financial hell, bankruptcy can provide immediate relief from the financial hardship caused by mounting debt.
In Australia, individuals do not need a lawyer to file for bankruptcy for personal debts. To file for bankruptcy protection in Australia, you must complete a Debtors Petition and Statement of Affairs and submit it, along with all requested documentation, to the Insolvency and Trustee Service of Australia (ITSA).
On the Debtors Petition and Statement of Affairs form you must provide the following information:
• Names of all your debtors, addresses, and the amount that is owed.
• Current income information.
• Personal asset information. This includes all property that you own, bank accounts, stocks or shares and any money that is owed to you.
• You must establish that the debts are either personal or business related.
Once the ITSA has received your completed form and accepted it, you will be considered bankrupt. Once you are officially bankrupt, you will receive notification from the ITSA of your bankruptcy case number and your obligations.
How Much Debt Must I Have To File For Bankruptcy?
There are no minimum requirements to file for bankruptcy protection in Australia. However, because of the seriousness of this type of action, it should be avoided for small debts. Many times you can easily work out an arrangement with the creditor for smaller debts. A creditor cannot make you bankrupt unless the debt is $5,000 or more.
If you do file for bankruptcy, it should be noted that the following debts cannot be included on your bankruptcy petition:
• Child support and maintenance payments.
• Fines or penalties that have been imposed on the debtor by any court.
• Most higher education debts.
How Long Does Bankruptcy Last?
Once your petition for bankruptcy protection has been filed, you will be considered bankrupt for the next three years and one day. However, the trustee appointed to your case by the ITSA can extend that bankruptcy period to either five or eight years if you do not comply with all obligations placed on you by the ITSA. After this time period has elapsed, you can apply to ITSA for your bankruptcy to be discharged.
What Will Bankruptcy Do To My Credit Rating?
Bankruptcy will appear on your credit record for seven years from the date you initially file for protection. During this seven year period you may find it very difficult to obtain any type of credit. Creditors are often nervous about extending even small amounts of credit to someone that has recently gone bankrupt.
A bankruptcy on your credit report may also have a negative impact on your employment. Some employment positions and trade unions do not regard a bankruptcy as acceptable.
What About My Home And Car?
When you file for personal bankruptcy, you are normally allowed to keep your car if it is your main source of transportation and is valued under a set amount. If the car is a secondary car or one that exceeds the value set by the ITSA, the car will be sold and the monies used to repay your debts.
A home is considered an asset and the trustee will be required to review the current status of the home. If there is excess equity available in the home, the trustee may be required to sell the home to access the equity to repay your creditors. The only homes that are protected are ones that have a Defense Service Home mortgage. However, these homes can also be sold if permission is granted by the Secretary of the Department of Veterans Affairs.
For more information visit the website: www.itsa.gov.au
About the Author
Biljana is a online researcher and a blogger, currently interested in publishing useful information about personal bankruptcy issues in Australia.