Bankruptcy Advice

Hiya.

Just wondering if anyone had advice on Bankruptcy? I have 2 properties and have to consider the inevitable. Selling is not an option due to the current market conditions. Unfortunately brought high(I.O) back in 2012. Times are tough but I rolled the dice no excuses.

I’ve read a bit and taken into account some info here but would like to hear some of your thoughts? Cheers

 

Talk to Citizens Advice in Australia about the impact that Bankruptcy may have going forward. In New Zealand we have a step before that called no Asset Procedure. Not sure if it is the same in Aus but suggest that you gather all your information.

 

What sort of advice are you after?

 

Sorry to hear that. Where the properties are and what is the shortfall? If you post numbers people here might throw in some ideas on possible ways to get out without bankruptcy.

Have you tried to call national debt hotline or National Legal Aid?

 

2012: mining town?

 

At some stage you will have to sell ,market's are just that so you would have to work out now or later ,but as some wear the bankruptcy tag and are proud for everything to go into one within the family and start-off the next day ..Talk to your Accountant --Legal person about several different outcomes bankruptcy is just one path on the list..

 

Hi Terry. Not sure to be honest I’ve never been nor known anyone in my predicament. Although I hear it’s now quite common in certain areas of WA. I guess I’m just reaching out for ideas to limit the blow and to prepare for the worst.

 

I may need another opinion because the advice I have is that bankruptcy is the most feasible path given the current state of financing, personal health, the list goes on.

 

Perth. Close enough.

 

Thanks mate for the help. Properties are SOR In the typical at risk areas. Complicated situation to unwrap but saving them is actually a low priority. Health issues and a laundry list of other failings have pushed the decision to give up on the dream. But certainly not on life.

 

Dear Warby

I am wondering if you should be talking to the Australian Financial Services Authority to explain your predicament and seek their advice. It could possibly give you some options to think about and clarity moving forward. Maybe a little control over the situation instead if feeling like you have no other choice.

 

you could seek legal advice on the consequences and the alternatives. There may be ways to structure things to minimise loss.

Beware of the nonlicenced bankruptcy advisers out there. One of my clients paid one of these guys $10k to help her become bankrupt. I am not sure why.

There are also expensive negotiation businesses out there who also charge $10k plus. This is something you can do yourself or you could appoint a friend as an agent for you so they could do it.

Watch out for the effects on licencing - mortgage brokers, financial planners, tax agents etc - these licences may not be available to a former bankrupt.
you cannot be a director of a company or a trustee of a trust if bankrupt. So if you are a member of a SMSF this will cause issues.

You won't get a security clearance if you work in government - or perhaps only a low level one.

Make sure parents etc change their wills as if you inherit something during bankruptcy it will be lost.

 

Great info terry thanks mate! SMSF is a bummer. I was hoping to sort since I feel the fees of my current provider are exhorbant.

 

Change to a low fee industry fund, most perform better than retail funds.

 

https://www.financialcounsellingaustralia.org.au/Home is a free financial counselling service with a helpline

There are more options than bankruptcy. However all have a impact and its not a free debt avoidance strategy. It can be like getting a bad tattoo.

Moving to a lower cost industry fund may be a option. The financial counselling service may even discuss the rare case of having super released to address financial hardship (or it maybe a poor choice)

 

PM if you want to have a specific chat about your situation. I can also recommend a reliable and licensed Bankruptcy Trustee. Free no obligation chat if you want to get some specific prelim advice.

I’ll summarise some options here, generally:

- Part IX if you have I think under $100k in debt, you offer x cents in the dollar. If accepted by majority of your creditors, you pay lower amount, debts are formally compromised and you walk away. Formal process, avoids bankruptcy but still on the record. Will only affect bank shortfall on property sales. Doesn’t compromise the secured amount. What is a debt agreement? | Australian Financial Security Authority
- Part X (Personal insolvency agreement), same as Part IX but for debts >$100k.
- Bankruptcy, no obligation to pay creditors but trustee will sell any assets of value.

Bankruptcy Info

- You’ll have to pay compulsory income contributions for 3 years. It’s essentially a portion of your wages paid to the trustee to contribute money to your bankrupt estate. The more you earn the more you pay. Look at AFSA website for current thresholds.

- Trustee will use any money recovered to pay his fees, then any leftover goes to creditors. You won’t see any of it.

- Trustee will report to your creditors on why and how you became bankrupt. It will also include details of all your employer, salary, current and recently disposed of assets (and if disposed of whether at fair value). Essentially the trustee will investigate the entirety of your affairs and report to creditors. It’s not a public report, in that joe blow off the street can’t see it, but any one or your creditors will receive a copy.

Above is high level. Feel free to reach out if you want to discuss further.

 

Do whatever you can to keep your super as super.

 

Super generally remains yours in a bankruptcy scenario, trustee can’t touch unless you purposely try to squirrel away additional money there knowing you could be insolvent. Technically Terry is correct above re SMSF but doesn’t mean you lose your super, just that structure might need to change - although the world isn’t going to come crashing down if you remain as a director of SMSF while bankrupt.

 

Yes i didn't mean to imply super could be taken. But that you cannot be a trustee or a director. A a bankrupt is legally disabled.

 

Ah yes it could. The ATO may likely find the trustee is not permitted and therefore the fund is non-complying. A bankrupt cannot appoint a replacement trustee or remove themselves or do anything in a legal capacity and may also breach Corps Act and Regulations. A bankruptcy trustee would easily find this when they search ASIC as part of their role. Criminal charges could result.