When it comes to
Bankruptcy Melbourne, quite often
people aren't aware that there are both voluntary, and involuntary bankruptcy -
each have different methods and guidelines.
Involuntary bankruptcy
occurs when a person you owe money to applies to the court to declare you
bankrupt. Usually when you get one of those notices, you have normally 21 days
to pay all the debt. If you don't, then the creditor goes back to the court and
requests the court to issue a sequestration order that declares you bankrupt. A
trustee is selected, and then you have 14 days to get the paperwork in and then
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 prevent it going to the next level. Other than
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 overseen to in the same way.
However, when it
comes to 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 tips 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 someone bankrupt you.
Once you are bankrupt, it's generally too late.
Voluntary Bankruptcy
However, when it
comes to Bankruptcy, sometimes there are moments that it is the most ideal option.
So you may need to ask yourself, 'when should I consider voluntary
Bankruptcy?'.
This question is
not the same for every person of course, but usually I find that one way you
could work it out is to figure out just how long it will take you to pay all 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
rate she was paying off 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 overlook 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 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
not fair. The punishment doesn't seem to amount to the crime in my book. So if
you actually have defaults on your credit report for 5 years, remember 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 take part 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 pay back 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 element more 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. Compared to countries
like the United States, our bankruptcy laws are extremely reasonable.
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 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 take care of a car
accident if the car was not actually insured.
There is far
more that can be said about this and Bankruptcy in general but the objective of
this blog was to help you decide between a few readily available options. When
getting some advice, remember that there are always possibilities when it
relates to Bankruptcy in Melbourne, so do some study, and Good luck!
If you would
like to learn more about just what to do, where to turn and what questions to
ask about Bankruptcy, then feel free to contact Bankruptcy Experts Melbourne on
1300 795 575, or visit our website: bankruptcyexpertsMelbourne.com.au.