When it concerns Bankruptcy, there are 2 types of people– those who have made a decision to declare bankruptcy and those individuals declared insolvent by others (Their creditors).

How-to-provide-security-over-assets-or-a-guarantee-to-a-lenderWhen it comes to Bankruptcy in Melbourne, normally individuals aren’t aware that there is both voluntary, and involuntary insolvency– and this is important because at times people don’t understand that others can declare them insolvent– and also if this happens you have certain rights and’ obligations attached.

Involuntary bankruptcy:

Involuntary bankruptcy happens when a person you owe money to involves the court to declare you bankrupt. This will result in you being issued with a notice that, normally when you get one of these types of notices, you have 21 days to pay all the financial debt. If you do not, then the lender returns to the court and asks the court to provide a sequestration order that declares you insolvent. During this time you are going to have a short window in which you can dispute and put your case forward as to exactly why it ought to not advance to the next level and why you should not be declared bankrupt. Once the determination has been made, you will be insolvent and experiencing the same procedures as people who took that path willingly.

Having said that, when it concerns Bankruptcy you can imagine that the involuntary procedure is full of much more strain, worry and concern because other people are taking control of your way of life. My biggest idea with Bankruptcy and involuntary bankruptcy is that if you believe that it might happen, get qualified recommendations on bankruptcy as early as possible, even if you are just worried about debt and fear that it might continue to escalate. I am sure that you can picture that it is much better to realise what you can and can’t do before being forced into that circumstance. The moment you are insolvent, it’s normally far too late to take steps.

What next?

Well if you have been declared bankrupt, you will not really have many options but to move through the process and you will want to get expert guidance to make sure you are declaring correctly, not breaking any guidelines, and will have the bankruptcy discharged as soon as possible.

The bright side is that in Australia the arrangements for bankruptcy are actually very generous: you could go bankrupt owing millions of dollars and after 3 years it’s all finished with no strings attached. Compared to countries like the United States, our insolvency laws are quite good.

I do not pretend to know why that is, but a couple of hundred years ago debtors went to prison. In these times I presume the government finds that the earlier it can get you back on your feet working and paying off income taxes, the better. It makes much more sense than locking you up which costs the taxpayer regardless.

Personal bankruptcy will wipe away the huge bulk of your several financial obligations, (including tax debts to the ATO) but bear in mind the few exemptions- the primary ones being Centrelink Debts, Court Fines like parking and speeding fines, HECS or Fee Help loans, and money to pay for a car accident if the car was not insured.

There is much more that might be stated about this and Bankruptcy in general so when getting some guidance, remember that there are often options when it involves Bankruptcy in Melbourne, so do some research, and good luck!

If you want to find out more about exactly what to do, where to turn and what inquiries to ask about Bankruptcy, then don’t hold off to get in contact with Bankruptcy Melbourne on 1300 795 575, or visit our website: www.bankruptcymelbourne.com.au.