Bankruptcy in Port Macquarie - does it matter if it is voluntary?

When it comes to Bankruptcy Port Macquarie, often people aren't aware that there can be both voluntary, and involuntary bankruptcy - both of these have distinct methods and rules.

Involuntary bankruptcy happens when somebody you owe money to applies to the court to declare you bankrupt. Generally 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 asks the court to provide a sequestration order that declares you bankrupt. A trustee is assigned, and then you have 14 days to get the documentation in then afterwards you are bankrupt.

You can contest a bankruptcy notice by going to court after the 21 days have expired and put your case forward, to stop it going to the next level. Other than the way you became bankrupt there is in fact no difference between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are simply declared bankrupt, they're conducted to in the very 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 likely to be made bankrupt by someone, get some guidance and act on that advice. Generally I've found it's always far better to know what you can and can't do before you have an individual bankrupt you. Once you are bankrupt, it's generally far too late.

Voluntary Bankruptcy

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

This question is not the same for every person of course, but generally I find that one way you could work it out is to figure out how long it will take you to pay each 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 came 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 off 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 overlook to pay your $30 phone bill for 6 months more, it's very likely the telephone company will default your credit file. That default will remain on your file for 5 years, so for $30 you can have your credit file truly damaged for that period of time - and all of this will impact how you need to approach Bankruptcy.

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

So if your credit rating is a big element in trying to decide whether to enter into 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 contrast is that with a DA or PIA you repay the money and still have it on your file for 7 years.

Bankruptcy

I have mentioned 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 talk about their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this specific country the arrangements are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all over with no strings attached. As compared to countries like the United States, our bankruptcy laws are extremely generous.

I don't claim to know why that is but a few hundred years ago debtors went to prison. Nowadays I suppose the government assumes 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 in turn 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 insured.

There is a lot more that can be said about doing 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, always remember that there are always choices when it relates to Bankruptcy in Port Macquarie, so do some study, and Good luck!

If you wish to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then don't hesitate to reach out to Bankruptcy Experts Port Macquarie on 1300 795 575, or visit our website: bankruptcyexpertsPortmacquarie.com.au.