Monday, July 4, 2016

Bankruptcy in Perth - does it matter if it is voluntary?

When it comes to Bankruptcy Perth, commonly people aren't aware that there are both voluntary, and involuntary bankruptcy - both have different methods and guidelines.

Involuntary bankruptcy occurs when somebody you owe money to involves the court to declare you bankrupt. Commonly when you get one of these particular notices, you have actually 21 days to pay all the debt. If you do not, then the creditor goes back to the court and requests the court to provide a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the paperwork in and after that you are bankrupt.

You can challenge a bankruptcy notice by going to court immediately after the 21 days have expired and put your case forward, to avoid it going to the next level. Apart from the way you became bankrupt there is in reality no difference between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are simply declared bankrupt, they're managed to in the exact same way.

However, when it concerns Bankruptcy for this, the stress, torment and fear that accompanies this method is incredible. If you think you are in all likelihood to be made bankrupt by someone, get some help and act on that advice. Generally I've found it's always more ideal to know what you can and can't do before you have someone else bankrupt you. Once you are bankrupt, it's normally too late.

Voluntary Bankruptcy

Nevertheless, when it comes to Bankruptcy, sometimes there are times that it is the best option. So you may want to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the same for each person of course, but normally I find that one way you could work it out is to figure out how long it will take you to pay each one of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may serve to help you make that decision, and help you to understand Bankruptcy.

Once, I had an 80 year old pensioner, who spoke to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the level she was paying her account, and it was 35 years! Imagine 35 years for one credit card bill.
Credit rating damage can help you think this through. If you move house and fail to remember to pay your $30 phone bill for 6 months more, it's very likely the phone service will default your credit file. That default will sit on your file for 5 years, so for $30 you can have your credit file seriously damaged for that period of time - and all of this will affect how you have to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is improper. The punishment doesn't seem to match the crime in my book. So if you already have defaults on your credit report for 5 years, keep in mind that bankruptcy is on your credit file for a total 7 years then its rubbed out completely.

So if your credit rating is a big factor in trying to decide whether to participate in a Debt Agreement or Personal Insolvency Agreement or Bankruptcy remember they will all sit on your credit file for a total of 7 years. The biggest difference is that with a DA or PIA you repay the money and still have it on your file for 7 years.


I have stated the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the element most people are afraid of when they come to me to go over their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this country the arrangements are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all finished with no strings attached. As compared to countries like the United States, our bankruptcy laws are really generous.

I don't claim to know why that is but a couple of hundred years ago debtors went to prison. These days I suppose the government feels the sooner it can get you back on your feet working and paying tax, the better. It makes more sense than locking you up which costs the taxpayer anyway.

Bankruptcy wipes all your debts including ATO debts with the exception of a few things:

·         Centrelink Debts, Court Fines like parking and speeding fines.
·         HECS or Fee Help loans.
·         Money to take care of a car accident if the car was not actually insured.

There is much more that can be said about this and Bankruptcy in general but the purpose of this blog was to help you decide between a few possible options. When getting some advice, keep in mind that there are always possibilities when it concerns Bankruptcy in Perth, so do some investigation, and Good luck!

If you wish to find out more about exactly what to do, where to turn and what questions to ask about Bankruptcy, then don't hesitate to contact Bankruptcy Experts Perth on 1300 795 575, or visit our website:

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