What you need to know when considering bankruptcy
In general, you are allowed to retain your personal
belongings, such as clothing. Customary tools of your
chosen trade are also exempt from seizure, as are life
insurance policies, injury compensation payments, and
superannuation funds. Cars, motorcycles, and other vehicles
are exempt up to a set value.
Assets which may be sold or seized
in order to pay your debts include real property, such
as houses, land, or business property, motor vehicles
over a set value, investment funds, tax refunds, lottery
winnings, and even estate proceedings in some cases.
Once you become bankrupt, you are required to remain
so for at least three years. This will seriously impact
your ability to obtain consumer credit.
Not all debts can be forgiven in bankruptcy.
Court fines and penalties, outstanding damages from
accidents, and certain government debts are not dischargeable
in bankruptcy proceedings.
Despite the serious negative effects
of bankruptcy, there are times when it makes financial
sense. If your debts far outweigh your assets, and you
see no means of paying them off, bankruptcy allows you
to offset your debts against your assets. This will
essentially erase the unpaid portion of the debt and
give you a new start, although not a fresh one; you
will deal with the direct results of becoming bankrupt
for three years, and it will remain on your credit report
for at least seven years and your public record forever.
Recently proposed by Attorney-General
Robert McClelland, the Bankruptcy Legislation Amendment
Bill 2009 would make bankruptcy
a less ruinous option for most individual. The bill
proposes to increase the amount at which creditors can
force bankruptcy from $2000 to $10,000; to increase
the time period from seven to twenty-eight days between
notice of intention to file a debtor’s petition and
the time when creditors can start action to collect
on debts, and to increase the amount of income, assets,
and debt thresholds to allow more people to achieve
relief from their debts. If this bill is passed, it
would be a boon to many struggling with consumer debt,
allowing them alternatives
to bankruptcy and providing assistance to those
already in the bankruptcy process.
If you are considering becoming bankrupt,
it is to your advantage to contact a legal expert with
the experience to assess your situation and provide
you with the best advice on your financial problems.
Bankruptcy can be a solution, but enlisting the help
of an expert in the field will ensure you make the right
decision for your financial situation.
about your bankruptcy options