Sunday, July 3, 2016

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


When it comes to Bankruptcy Perth, typically people aren't aware that there can be both voluntary, and involuntary bankruptcy - both have unique approaches and policies.

Involuntary bankruptcy takes place when somebody you owe money to applies to the court to declare you bankrupt. Commonly when you get one of these notices, you have 21 days to pay all the debt. If you do not, then the creditor goes back to the court and asks the court to provide a sequestration order that declares you bankrupt. A trustee is assigned, and then you have 14 days to get the paperwork in and then you are bankrupt.

You can object to a bankruptcy notice by going to court after the 21 days have expired and put your case forward, to prevent it going to the next level. Apart from the way you became bankrupt there is in reality no difference between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're administered to in the exact same way.

However, when it comes to Bankruptcy for this, the stress and anxiety, torment and fear that accompanies this method is incredible. If you think you are prone to be made bankrupt by someone, get some help and act on that advice. Generally I've found it's always more effective to know what you can and can't do before you have an individual bankrupt you. Once you are bankrupt, it's typically far too late.

Voluntary Bankruptcy

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

This question is not the very same for every person of course, but normally I find that one way you could work it out is to figure out 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 serve to help you make that decision, and help you to understand Bankruptcy.

Once, I had an 80 year old pensioner, who came 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 her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can 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 phone 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 very seriously damaged for that period of time - and all of this will affect how you need 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, keep in mind that bankruptcy is on your credit file for a total 7 years then its rubbed out completely.

So if your credit rating is a big factor 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 repay the money and nevertheless 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 part 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 specific country the arrangements are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all over with no strings attached. As compared to countries like the United States, our bankruptcy laws are quite generous.

I don't claim to know why that is but a couple of hundred years ago debtors went to prison. Nowadays I suppose the government feels 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 all of your debts including ATO debts except for 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 actually insured.

There is a lot more that can be said about doing this and Bankruptcy 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 choices when it involves Bankruptcy in Perth, so do some homework, and Good luck!


If you would like to learn more about exactly what to do, where to turn and what questions to ask about Bankruptcy, then don't hesitate to check with Fresh Start Solutions Perth on 1300 818 575, or visit our website:freshstartsolutions.com.au/bankruptcy-Perth

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