Bankruptcy in Geelong - does it matter if it is voluntary?

When it comes to Bankruptcy Geelong, often people aren't aware that there may be both voluntary, and involuntary bankruptcy - each have unique approaches and rules.

Involuntary bankruptcy happens when somebody you owe money to applies to the court to declare you bankrupt. Generally when you get one of these types of notices, you have normally 21 days to pay all the debt. If you don't, then the creditor goes back to the court and asks the court to issue a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the documents in then afterwards you are bankrupt.

You can contest a bankruptcy notice by going to court shortly 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 concerns Bankruptcy 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 tips and act on that advice. Generally I've found it's always more ideal to know what you can and can't do before you have someone else bankrupt you. Once you are bankrupt, it's generally far too late.

Voluntary Bankruptcy

However, when it comes to Bankruptcy, sometimes there are times that it is the best option. So you may have to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the very same for each person of course, but usually I find that one way you could work it out is to figure out how long it will take you to pay every one of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may assist you make that decision, and help you to understand Bankruptcy.

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 rate she was paying 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 fail to remember to pay your $30 phone bill for 6 months more, it's very likely the phone service will default your credit file. That default will sit on your file for 5 years, so for $30 you can have your credit file very seriously damaged for that period of time - and all of this will affect how you have to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is improper. The punishment doesn't seem to amount to the crime in my book. So if you currently have defaults on your credit report for 5 years, bear in mind that bankruptcy is on your credit file for a total 7 years then its wiped off completely.

So if your credit rating is a big aspect 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 change is that with a DA or PIA you pay back the money and still have it on your file for 7 years.

Bankruptcy

I have talked about the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the element most people are afraid of when they come to me to go over their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this 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 couple of hundred years ago debtors went to prison. These days I suppose the government believes 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 in turn costs the taxpayer anyway.

Bankruptcy wipes every one 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 much more that can be said about doing this and Bankruptcy in general but the objective of this blog was to help you decide between a few possible options. When getting some advice, keep in mind that there are always alternatives when it relates to Bankruptcy in Geelong, so do some groundwork, and Good luck!

If you want to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to consult with Bankruptcy Experts Geelong on 1300 795 575, or visit our website: bankruptcyexpertsGeelong.com.au.