Bankruptcy Advice

Under trust law a trustee is automatically disqualified once bankrupt. That would mean any decisions they make after this are invalid.

 

Mate... extremely unlikely trustee or AFSA will care or pursue criminal charges. Resources are focused on increasing return to creditors. If you have ever dealt with trustees or AFSA, you would know this.

Re: ATO. As I said, you can restructure before bankruptcy, but not that difficult to do post. Either way, highlights the importance of advice from a licensed trustee.

Yes, in a capacity as trustee, but not as a member of SMSF.

 

ATO can for SMSF breach of s15A SISA. More likely they would not but a lifetime trustee ban could result. 50% each way bet if they issue a letter of non-compliance since the SISA compliance cannot be met without them finding the fund non-complying. Or the best outcome for the other 50% - they could order winding up of the fund. If the fund holds property that means it must be sold. Limited recourse facilities in a SAF are VERY difficult to get approval for.

I encountered an adviser who came to me with a curly SMSF issue along this line. The SMSF had a limited recourse loan. Trustee in bankruptcy advised the lender (STG) who advised a breach of the terms of the mortgage concerning Director guarantee. The member had a EPOA in place for the management of the fund and custodian trustee whilst bankrupt. However the Bank required loan repaid and couldnt accept a guarantee from anyone else under its policies to comply with the limited recourse rules. Policy didnt allow this to be waived. The bank had to get special legal advice (that the fund had to pay for !!) It confirmed the problem. Property had to be sold all because of the guarantee and nothing else. It is a lesson in why legal advice about all of a taxpayers affairs prior to bankruptcy is important.

 

I think it is very dangerous to be getting advice on bankruptcy other than from a lawyer. It is legal advice after all.

 

You mean if one earns over the protected amount of approx 1400 net per week?

 

Yes. Assessed annually (rather than weekly) so if you earned under c. $1400 pw but received a year end bonus or have lumpy income, that would also be included in the annual threshold. Note: threshold is different if you have dependants.

Practically, trustee will do an estimate for year ahead and ask you to start contributing then. Trustee will then review at year end & adjust if necessary.

 

If you are in Perth you should contact Frances Piggot at Piggot Partners - their website is aweful but their advice is good and not too expensive.

Piggott Partners

I can refer to a few liquidators but their fees very quickly skyrocket.

 

Id imagine my case is relatively simple in terms of bankruptcy. I have few assets or liabilities for that matter. Im not sure how providers or trustees make there money but i can't see them being all that enthused.

Is it a per hour charge kind of thing Ross? Bankruptees having to pay full services fees upfront id imagine.

 

She is quite reasonable on fees. I recommend you chat. Ask about fees. Yes upfront payment. If it is simple she will let you know - their is no success fee.

I have gone through a few people and she is the best I have met so far in terms of fees and attitude to simple matters.

 

I would speak to a financial counselling / lawyer first.
Asking a bankruptcy trustee is like asking for health advice from an undertaker.

 

Thanks Paul. Do you have any recommendations? Also could you advise please what questions and info i should have prepared? Thanks in advance

 

I sent a link earlier in thread. And its free.

I would be exploring what the options are and the pitfalls of each. Bankruptcy is not as easy as many think. Its like a face tattoo. Its like having a criminal conviction on record. It just never goes away. But if it cant be avoided it may be a option. I have seen many people start down this road and choose other options. One managed to strike a deal and pay what they could and even the ATO wrote off their debt under hardship provisions

 

Can anyone advise on credit cards? pre, during or post bankruptcy? Im pondering if i should develop small credit repair strategies now by adopting a tiny hire purchase, CC card with small limit etc

 

Spoke to them a few weeks ago and they were helpful. Thanks for the heads up

 

Absolute and complete lack of understanding of the industry. Good trustees will present options outside of bankruptcy.

Yes, they will often ask for something upfront. Can also get paid from net proceeds from any recoveries / sale of your assets, if any. Charge is hourly but they can only get paid from these two options.

I can also recommend a good trustee if you want a second option. He will be happy to chat informally over the phone to discuss your options, no charge.

 

You need legal advice. first, and then see potential trustees. Trustees are generally not lawyers but accountants who administer the estates of bankrupts, so I am not sure what sort of advice they could legally give.

 

They are not lawyers but they do more than administer estates. They provide specific advice to those in financial distress, just as a tax accountant provides specific advice about tax.
The difference is they are usually tasked with carrying out those plans.

They are also specifically tested, licensed, monitored and audited by the Australian Financial Security Authority (over and above their ‘accountant qualification’). The Trustee qualification test is primarily law and financial based and isn’t easy.

Practically, they also advise banks on distressed files, act as expert witnesses in court cases, restructure the affairs of individuals. This is their job and expertise.

Not a go at you Terry, but the whole industry is unfortunately completely misunderstood. Lawyers are a big referral source for trustees because lawyers don’t usually provide advice on financial matters such as this.

 

Frances is a lawyer

 

What do private trustees costs as an average? Ive seen estimates of 10K. Buggered if i know where im getting that amount from!

Also what would be the value proposition of a private trustee vs filing yourself(with quality paid advice)

Id imagine someone with complex dealings(divorcee, business partners etc) would require that extra touch but a single person with a straight forward case? This is not me by the way i wish! I guess i'm just trying to understand the nuances of trustees and really the system as a whole from the eyes of property gurus.

I will seek professional advice soon but it is still great to hear your "thoughts and opinions" on the matter guys/gals. Much appreciated