Declaring Bankruptcy – FAQ

Can I travel internationally?

Yes. All you will need to do is apply to your bankruptcy trustee for consent to go. You’ll get it, however there is a one-page form you will need to fill in simply to notify the trustee of how long you will be traveling, etc. This measure is really only there so high rollers don’t skip the country. In some cases the trustee will ask for your passport, but don’t worry about it because you can request it back when you need to take a trip. Call us if you need to know more about travel on 1300 795 575.

Can I keep my the family home?

In many cases the answer is yes! In fact, in most cases these days we can help you keep your home. At Bankruptcy Experts we are professionals at aiding people keep their houses. It’s possibly very complicated, so if you are concerned about losing your home call us on 1300 795 575 and we will guide you through your choices.

The notion of losing the family home is probably the most typical obstacle to people declaring bankruptcy. We consult with people daily who have battled for many years under massive financial tension so they don’t lose their home.

So how is it possible to become bankrupt and keep your house? Simple, really; it’s a matter of equity. Let’s put it this way, if you own a home that’s worth $350,000 and you owe the bank $350,000 you effectively have no equity in the house, right? The trustee will only sell off your home if there is enough equity in the home if sold to repay some of your debts. So in this particular situation, the trustee will then offer you some alternatives, one of which is to simply to continue paying the mortgage and live in the house while you are bankrupt.

So how can I learn the value of my home? A quick way is to go onto realestate.com. au and check out the sold houses tab in the Penrith area and it will show you all the recent sales in your neighborhood. Another possibility, if you are confident or are very worried, is to have a registered valuer do a valuation on your home, not a real estate agent (unless they are registered valuers, naturally). Be advised this will cost you somewhere between $300-700. Just another thing about house values. If the trustee wants to sell your house they do this reasonably quickly. It’s not a 6-month glossy marketing campaign and instead it’s generally by auction and they just meet the market on the day and that’s it. So when thinking of the value remember it’s a sell now price, not when the market picks up.

Once you have discovered the value of your house the next thing to examine is ownership.

Generally most home loans are between 2 people as joint tenants who both contribute to the mortgage. If only one party is filing for bankruptcy then the equity is calculated in this manner.

Say your house is worth $400,000 and the current market value is $350,000. Then the balance of equity in the home is $50,000, right? Half of that total equity is automatically allocated to the party not going bankrupt, leaving $25,000 for the bankrupt. Out of that $25,000 the bankrupt party has to pay for all of the selling costs including promotions etc., which, according to where you live, can cost anywhere between $12,000-20,000. In this particular case say the selling expenses are going to be $15,000 then the remaining left over after the sale is $10,000. So in this case the trustee will give the non-bankrupt party a number of options. One of which is typical is for the bank to say, “Pay us the $10,000 and we won’t sell the home and you will have it removed as an asset from the bankrupt’s estate.” Or, in other words, negotiate to pay the $10,000 and you can keep the house.

Just a side note: the lender who has given you the loan will need the repayments to be maintained of course.

Regardless of what the trustee decides, if you don’t pay the bank the loan they will eventually ask you to leave. So, in other words, keeping your house naturally implies keeping the home loan also.

There are plenty more options with your house, and we have just outlined one option of potentially 20 alternatives you can decide on, when it pertains to your house. We understand you will want to get this right. Gambling with the family home can possibly be an overwhelming business. If you intend to get the right advice or you just want to talk to someone phone us on 1300 795 575.

When would my overseas travel be limited?

Your travel would be limited by the trustee as a result of legal action. For example, if your bankruptcy is a part of a criminal investigation or fraudulent activities, it’s possible the trustee will restrict your travel.

What happens to my credit rating?

Bankruptcy lasts 3 years and will sit on your credit report for that time. However, just like any default it will appear on your credit report for 7 years. You can have it eliminated if you get your bankruptcy annulled.

Will I ever have the chance to borrow money again once I’m bankrupt?

Bankruptcy lasts 3 years, and in that time you will not get a loan. After the 3 years is up you will have the chance to get loans; you just won’t get the very best rate. Your credit report will be wiped clean 4 years after you have been discharged as a bankrupt then you will have a perfect credit history again and you will get the best deal on loans.

Will I lose my car if I go bankrupt?

Ordinarily no. Bankrupts seldom lose their cars because they’ve gone bankrupt. Naturally, this is conditional and we can let you know if yours is safe. Call Bankruptcy Experts Penrith on 1300 795 575.

There is a threshold or amount of wholesale value your car can be worth while you are bankrupt, which is $7,350. You will find all sorts of incorrect information about this on the net, but here are the facts. That $7,350 represents not the total value; it represents equity. So, simply put, if you have a car worth $35,000 you are paying off or leasing and the amount you could sell it for is $30,000 then you can keep your car because its equity is only $5,000. The company that lent you the money for the car will be satisfied for you to keep the car even though you are bankrupt provided that you continue the payments.

What if I’m overdue on my car payments and I go bankrupt; will they take my car?

Get some advice on this one. If you need some advice right now just call 1300 795 575. Basically, you will get about 2 to 3 payments grace when it comes to car loans. The bottom line is simple: whether you are bankrupt or otherwise, if you miss 3 or more payments on your car loan the bank will repossess the car. Don’t presume because you are going bankrupt you are automatically going to lose your car because most of the time we help people keep them.

When are the creditors notified of my bankruptcy?

The creditors, or the people you owe money to, are notified in writing at about the same time you receive your bankruptcy file number.

Will anyone come to my house?

No. The bankruptcy procedure is ultimately a paperwork exercise. The only thing that actually occurs is you will either be sent a letter by snail mail or emailed a letter informing you that you are bankrupt. At Bankruptcy Experts Penrith we ensure that this entire process is that simple, so if you have questions about this phone 1300 795 575.

Can I have my bankruptcy annulled?

Yes. This process will take about 2 weeks and will absolutely eliminate the bankruptcy from your credit history. There are provisions within the Bankruptcy Act that allow a bankrupt person to have their bankruptcy annulled through a Section 73 proposal.

The repercussions of creditor’s claims can often result in bankruptcy, regardless of whether or not it was the individual’s preference to enter bankruptcy, or if it was filed by a creditor. However, bankruptcy is far from the end of the world for the individual who experiences bankruptcy.

We have been guiding people in the Penrith area for years so phone us today on 1300 795 575 to get some advice on this issue. We work out the best possible strategy for you to get back up and running, eliminating residual effects and hindrances of past financial situations to give you the best possible outcome. Having experience and skills specialising in Section 73 proposals, we can combine this with our proven solutions and tactics to bring you through bankruptcy in one piece, ready to start over.

Can I get my bankruptcy annulled?

First of all, having your bankruptcy annulled is generally reversing it 100 %. So if you are contemplating you would like to have your bankruptcy annulled there are a few things you have to know.

Firstly, how does the annulment work? An easy way to understand it is let’s say somebody owes you $50,000 and they haven’t paid you one penny back for years. Then to make things worse you learn that they have gone bankrupt. You would kiss that money goodbye, right? Many years pass and they approach you with an offer to repay you $5,000 that their father is giving to them to settle your debt with them. Obviously you are pleased to take it, because it is better than a kick in the teeth. The only condition they request in return is that you agree to have the bankruptcy wiped from their record, and if you don’t agree to do that then there will be no $5,000. Obviously you don’t care about their record; you are just over the moon they are offering you some money after all these years.

In bankruptcy terms this procedure is often referred to as a Section 73 proposal, and it’s an approach where “everybody wins.”.

Ultimately the trustee approaches your creditors, proposes your offer, which is considerably less than the original debt owed, on the condition they clear your credit file clean.

This procedure takes a few weeks. The proposal could be done at any time in the 3 years you are bankrupt. However, you ought to bear in mind the timing of your proposal. Because it does cost money to do this, you need to ensure the odds are on your side. As an example, if you are paying back money to the trustee each week because you earn over the threshold amount, then your creditors will know they are going to receive a certain amount from you over the 3 years in any case so it better be more than that will add up to.

If you have only been bankrupt 3 weeks it will be more challenging to get an annulment because they may get some funds from you over the 3 years if you earn over the threshold sum of money.

If you want assistance to put a section 73 proposal to your trustee or just want more information about the timing of when to put a proposal forward, simply call us on 1300 795 575.

Can I go bankrupt if I’m currently in a Debt Agreement or Personal Insolvency Agreement or in a Debt Consolidation Loan Contract?

Yes! We can help you get out of all of these agreements. With Debt Agreements and Personal Insolvency Agreements we have to have you released from them first before you declare bankruptcy, but it’s not a problem. If you are locked into one of these and just can’t climb on top give us ring at 1300 795 575.

What debts won’t bankruptcy wipe out?

There are just a few debts that bankruptcy won’t 100 % remove, like Centrelink, child support, HECS and a court-imposed fine (speeding fines, etc.) and, finally, money owed to an insurance company as a result of a car accident in an uninsured car that you were driving.

Besides that, it will remove debts like your credit cards, store cards, GST and tax, unsecured personal loans, etc. Actually, there are a lot of things to list so if you have a particular debt you are worried about just ask for a free consultation 1300 795 575.

Is there a limit to the amount of debt I can go bankrupt for?

You can’t go bankrupt for an amount under $5,000; however, there is no limit above that. If you owe a few million dollars, that’s treated no differently than $20,000.

What is the difference between a secured and unsecured debt?

An unsecured creditor is a creditor who does not have a security the chattels/assets/property acquired with the credit given to you. Such debts include credit card debts.

A secured creditor has a hold over the chattels/assets/property until the debt is paid completely. If a debtor defaults on a secured debt, the creditor has the right to repossess and sell the chattels/assets/property to reduce the debt.

How can I be sure that you will be successful in making me bankrupt?

We have helped thousands of people file for bankruptcy over the years and we have never had anyone’s application rejected. That’s why we offer a 100 % money back guarantee.

Suppose I’m not completely sure who I owe money to?

There is a basic method we use here, and all you have to do is get a copy of your credit report as it will have your credit history on there. Companies like www.veda.com.au will be able to get you a copy for a small fee.

I’ve had a car accident. Will the debt be covered in bankruptcy?

Motor vehicle accidents might be complicated, so to keep it simple call us on 1300 795 575 to get the right advice on your situation. However, as a general rule, if you were driving a car that was not insured then the cost of the repairs is not erased with bankruptcy. Having said that, it depends who admitted liability or who was at fault. If you go to court and the court demonstrates you were not at fault then you should be fine.

Can I have business debts erased with my bankruptcy also?

Yes! We can help you do this, although it’s possible there are implications and plenty of regulations around this procedure, so give us a call and we will help you through the process on 1300 795 575. Bankruptcy Experts Penrith are specialists at helping businesses get back on their feet.

Can I pay out my bankruptcy debt and have it annulled?

Yes. There is an approach to follow, but if you win lotto or inherit some money you can use it to get your slate wiped clean. There is a way of accomplishing this properly; just phone us first.

Suppose someone is bankrupting me; is there anything I should do?

Generally, if you owe money to a lender they can obtain a court order and bankrupt you. They need to follow a procedure, but it is feasible. What you need to avoid at all costs if possible is someone else bankrupting you, as it’s always best to voluntarily declare bankruptcy. Unless you enjoy court cases and annoying phone calls, of course.

What if my company has received a Demand or Wind-Up notice; can I still go bankrupt?

Yes. However, this is a complicated process and we suggest you get some expert advice; if its handled incorrectly, it could be fatal. For a free consultation contact Bankruptcy Experts Penrith 1300 795 575.

Do I need to contact my creditors?

No, we do that for you. Actually, we work as a buffer or a midway point between you and your creditors. So ultimately you are not required to inform them of your bankruptcy; we do that for you.

How long does bankruptcy last?

3 Years.

How long does it take to declare bankruptcy?

Usually, it takes about 2 weeks.

What if someone else signed for a loan (joint loan or guarantor) and I go bankrupt; will they still be liable for the debt?

Yes. Normally a lender will pursue the other person who signed the loan papers with you for the full amount of the remaining debt owing on the loan.

What happens to a debt I failed to remember at the time of becoming bankrupt?

Don’t panic! If you overlooked a debt and remember it later, just speak to your trustee with the name of the creditor, address, date the debt was incurred, sum of debt and any account or reference number/s supplied by the lender. Your trustee will add the creditor to your bankruptcy paperwork and mail a notification to the creditor.

Do I have to go to court if I go bankrupt?

No. We handle the entire procedure for you.

What if I have gambled some of my funds and I go bankrupt; will I get in strife?

Generally this is not a problem, so if you are a gambler, don’t worry. What the trustee doesn’t like is inconsistency here. In other words, you have never taken a chance in your life and all of a sudden you lost $50,000 on the horses, then you might have some explaining to do, of course, because it just doesn’t add up.

Can my bankruptcy be completed the phone?

Yes. We understand you are busy. If you have a phone we can help you; simply call us on 1300 795 575.

What if I’m living offshore; can I still file for bankruptcy?

Yes. This is possible. It requires some emails back and forth but it can be accomplished.

Can I include my foreign debts in my bankruptcy?

Yes. If an individual originally living in another country is now residing in Australia then files for bankruptcy and they have a debt incurred in that foreign country, you just list that debt on the paperwork.

In most cases the creditor overseas will eliminate the debt. It is possible and legal for them, however, to reject your application, and if you go back to that country you may be subject to their bankruptcy laws.

How will the trustee know what assets I have?

There are a few ways the trustee can determine, and the most effective and easiest way is for you to inform them when we do the paperwork. There is also a government register which has major assets listed also. You have to get some advice about assets; be careful.

Can I keep an inheritance if I file for bankruptcy?

This is tricky and you will require the correct guidance, so if you need more information about inheritances call us on 1300 795 575.

Will I lose my Pension or Workers Compensation payments if I go bankrupt?

No. The income thresholds are the same for everyone so regardless of how you earn your income you have to earn about $50,000 each year before your income will be affected by bankruptcy.

Will I be able to keep my tax returns once I’m bankrupt?

Yes, if you owe the ATO money. Put simply, if one of your debts is tax debt, then no, the Australian Tax Office will keep the money you owe them.

No, if you do not owe the tax office money. Your tax return is considereded net income, so if you are below the threshold amount you can earn while bankrupt then you will get your whole tax return back.

What about child support ?

If you are required to pay child support, this amount will be deducted from your net income, so what you get to keep after you pay your tax and then child support is considered net income. That is why in the world of bankruptcy net income figures are always quoted.

Can I buy shares and make investments while I’m bankrupt?

Yes, you are permitted even while you are bankrupt, but the trustee will get them off you, as they are considered an asset.

What assets can I keep if I go bankrupt?

You can keep just about everything except big things like houses, cars, shares and inheritances. Even things like houses and cars may be able to be saved. Just call us before you make any bold decisions on 1300 795 575 for Bankruptcy Experts Penrith.