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

When it comes to Bankruptcy Canberra, often people aren't aware that there can be both voluntary, and involuntary bankruptcy - both of these have distinct approaches and guidelines.

Involuntary bankruptcy occurs when a person you owe money to involves the court to declare you bankrupt. Typically when you get one of these particular notices, you have normally 21 days to pay all the debt. If you do not, then the creditor goes back to the court and requests the court to issue a sequestration order that declares you bankrupt. A trustee is appointed, and then you have 14 days to get the paperwork in and then you are bankrupt.

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

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

Voluntary Bankruptcy

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

This question is not the same for everyone of course, but basically I find that one way you could work it out is to figure out just 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 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 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 fail to remember 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 remain on your file for 5 years, so for $30 you can have your credit file truly damaged for that period of time - and all of this will impact how you need to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is unjust. The punishment doesn't seem to equate to the crime in my book. So if you already 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 erased completely.

So if your credit rating is a big aspect in trying to decide whether to enter into 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 difference 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 part more people are afraid of when they come to me to discuss their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this 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. Compared to countries like the United States, our bankruptcy laws are very generous.

I don't pretend to know why that is but a few hundred years ago debtors went to prison. These days I suppose the government finds that 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 pay for a car accident if the car was not insured.

There is a lot 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 available options. When getting some advice, don't forget that there are always options when it comes to Bankruptcy in Canberra, so do some research, and Good luck!

If you wish to learn more about exactly what to do, where to turn and what questions to ask about Bankruptcy, then feel free to check with Bankruptcy Experts Canberra on 1300 795 575, or visit our website:bankruptcyexpertsCanberra.com.au.