Bankruptcy is not designed as a punishment. It is more like a financial ‘reset’ button.
However, bankruptcy has serious consequences and should only be considered as a last resort.
The Bankruptcy Act was introduced in 1966 to help Australians who, through no fault of their own, find themselves in a position where they will never be able to repay their debts.
If you are in a situation like this and you cannot arrange a debt agreement, bankruptcy may be a solution.
The key features of bankruptcy include:
New Leaf can complete the necessary legal documents.
Bankruptcy is broken up into two periods: the ‘undischarged bankruptcy’ period that lasts for three years, during which time the restrictions imposed by the Bankruptcy Act apply. The second period is called ‘discharged bankruptcy’, which lasts for a further two years where no restrictions apply.
All bankruptcies are recorded permanently on a historic government database called the National Personal Insolvency Index (NPII).
Most unsecured debts can be cleared by bankruptcy (credit cards, personal loans, tax bills). However child support, HECS/HELP and fines cannot be included in bankruptcy.
Bankruptcy isn’t a punishment. However, it is reasonable that creditors should get some money if the person filing for bankruptcy is a high-income earner. During the ‘undischarged bankruptcy’ period (three years), if you earn more than the income threshold, you’ll be asked to make ‘bankruptcy income contributions’. Above the threshold, 50% of your after-tax wage goes to your trustee.
This is the process New Leaf follows to help clients who believe bankruptcy is the right solution for them.
The legislation surrounding bankruptcy is complicated. However, our consultants are happy to answer any queries. Remember, bankruptcy should be considered only as a last resort.
Bankruptcy is one option in a range of debt solutions. For an overview of the options available, take a look here. You must determine whether the information is appropriate in terms of your particular circumstances.
Want to know more about bankruptcy or other solutions? Talk to us, and we’ll take you through your options. We’re experts in finding the right debt solutions for people who are experiencing difficulty with their debts.