FAQs About Bankruptcy

Bankruptcy lawyers in Melbourne see many people in dire financial situations, as it’s their job to help them through the minefield of bankruptcy. Below are several common questions people ask when facing bankruptcy. 

How Does Bankruptcy Happen to You?

If you just can’t seem to find a way to pay your debts, you can file for bankruptcy by completing a Debtor’s Petition for the Official Receiver at the Australian Financial Security Authority (AFSA). This organisation is run by the Commonwealth Government. After filing for bankruptcy, you can nominate your Official Trustee from AFSA or from another agency. Your bankruptcy lawyers in Melbourne can advise you on this. A creditor can make you bankrupt through the court system if you owe more than $5,000. If you find yourself in this situation, you can choose to have the court elect a private trustee for the bankrupt estate or an official trustee.

How Do You Decide Whether to Go Bankrupt?

Finding yourself in financial difficulty, you might be wondering how you know when bankruptcy is the right option for you. If you are in this situation, you should speak with your bankruptcy lawyers in Melbourne who can advise you on such matters. They will have seen countless scenarios where people are considering bankruptcy, and they’ll have a wealth of experience in counselling people through this process, or suggesting alternative measure to resolve their financial situation. If you have personal business debts that you’re having a hard time paying, or perhaps if you owe a debt to the ATO, you could be experiencing financial hardship. To find out what the right path to take is, it’s worth consulting with a trusted bankruptcy lawyer.  

What Are the Consequences of Becoming Bankrupt?

You are considered bankrupt for 3 years following the filing of a Statement of Affairs with the AFSA, which details your assets and liabilities. You are no longer responsible for the majority of your debts. The bankruptcy trustee will manage the sale of your assets during the bankruptcy. There will be legal implications, such as the bankruptcy trustee seeking to understand if any legal claims on you are possible to be pursued as recovery of funds occur in the bankrupt estate. Any funds thereby created through sales of assets in the estate will first cover the trustee’s costs and then contribute towards the debts that you have. 

Do You Have to Pay a Proportion of Your Income to Your Trustee?

There is an amount set by the government each six months, and if you earn more than this in after tax income, you must make contributions to your trustee. If you have dependents, the amount of income you can earn without making contributions is relatively higher. If you’re making enough money to need to pay contributions, fifty cents in every after tax paid dollar earned must be given to your trustee. Your bankruptcy lawyers in Melbourne will be able to provide further guidance on this subject.   

Are There Other Options Than Bankruptcy? 

If you find yourself in the situation of not being able to pay your debts, there are a few different options which you can discuss with your bankruptcy lawyers in Melbourne. For example, you can negotiate a settlement of debts with creditors, you can draft a debt agreement proposal, or you can put forth a personal solvency agreement. Your lawyers will be very familiar with the options available and can help you find the right route for you.