Should I Declare Bankrupt

This seems to be the flavour of the month at the moment
People become  bankrupt for a lot of reasons

 Can't pay a debt 
 Thinking it is the easy way.
 Just want the creditor off their back

It is a big deal, it will affect you for years to come. 

How would you like it if you had to ask permission to travel or
when you change address you need to tell someone. without fail!!!

Getting a loan will be difficult, when you do the interest rate will be higher as you are a risk in the lenders eyes. .

The affects of being  bankrupt are.....   (Saying that I know a couple of people who bounced back)

Affects of being Bankrupt

If you are unable to pay your debts and cannot come to suitable repayment arrangements with your creditors, you may voluntarily petition to become bankrupt. At the time of petitioning, you must be present in Australia or otherwise have an Australian connection (eg you ordinarily live in Australia or are involved with a business operating in Australia).

Creditors can also apply to the court to make you bankrupt if they can satisfy the court that you owe them money above a minimum amount.

What happens when I become bankrupt?
Bankruptcy generally lasts for a period of three years but can be extended in certain circumstances. There is a permanent record of your bankruptcy on the National Personal Insolvency Index (an electronic public register which can be accessed by anyone for a fee).

Your creditors are notified of your bankruptcy and unsecured creditors should stop pursuing you for payment of your debts.

A trustee will be appointed to your case. In order to pay your creditors, this trustee will:
  • sell your assets (although you will be able to keep certain types of assets)
  • mandate contributions from your income once you earn over a certain amount
  • investigate your financial affairs and may recover property or money that you have transferred to someone else for inadequate consideration

The duties of a trustee are specified in legislation and trustees have to adhere to certain standards while administering your estate. You can choose to appoint a registered trustee by obtaining and providing their consent when you lodge your petition to become bankrupt. If you do not choose a trustee, the Official Trustee (ITSA) is initially appointed to administer your estate. Your creditors may choose to change the trustee at any time.
Becoming bankrupt .
  • If you are choosing to become bankrupt voluntarily, you must complete a Debtor’s Petition form. (If a creditor has successfully petitioned a Court to make you bankrupt, this is not required.)
  • You must complete a Statement of Affairs that truthfully discloses all relevant details of your current financial position. This includes all debts, as well as your current and recently owned assets.

Obligations during the period of your bankruptcy .
  • Change of name or address
    You are required to notify your trustee of all changes of name and/or address.
  • Overseas travel
    If you wish to travel overseas you must obtain the written permission of the trustee administering your estate who may impose conditions of travel. You may have to surrender your passport to your trustee.
  • Change in income during bankruptcy
    You must notify your trustee of any change in your income especially if your new income is close to certain income threshold limits.
  • Changes in assets during bankruptcy
    You must notify your trustee if you inherit any property, win money or otherwise receive any assets while you are bankrupt.
  • Cooperating with your trustee
    You must cooperate with your trustee and provide information when requested. You may also be asked to attend meetings, or answer questions at an examination under oath. If you fail to cooperate with your trustee, your period of bankruptcy can be extended under certain circumstances.

If your bankruptcy is being managed by the Official Trustee (ie ITSA), you can access forms for change of address and overseas travel requests online.

If your case has been assigned to a Registered Trustee, you need to contact them directly when your circumstances change.

Restrictions on your conduct during the period of your bankruptcy .
  • Borrowing money
    When you are borrowing money, purchasing goods on credit or incurring credit in any way over a set limit, you must inform the person you are dealing with that you are an undischarged bankrupt.
  • Managing a corporation
    You cannot be a director of a company or be involved in its management without the permission of the Court.
  • Conducting a business
    You may be able to continue to operate a business while bankrupt. However, if you trade under an assumed name or (whether alone or in partnership) a firm name, you must disclose that you are a bankrupt to everyone that you (or the partnership) deal with.
  • Statutory positions
    You may be prevented from holding certain statutory positions.
  • Restricted trades and professions
    While generally bankruptcy does not prevent you from earning a living, you may not be able to remain employed in particular trades and professions.
  • Court actions
    You may be prevented from continuing any court action that you have started.

Failure to comply with the above obligations and restrictions can lead tofines or a criminal prosecution, and potentially imprisonment.
If you want to learn more please go to/www.itsa.gov.au/

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