Bankruptcy is one way to manage your debts if you are struggling to pay back the people or organisations you owe money to. It’s not an easy way out — entering bankruptcy means the Official Assignee has control over (almost) everything you own, and can sell them at any value to pay off your debts.
A Creditors Proposal is the best alternative to a bankruptcy, with many advantages and far fewer restrictions, so if you are thinking of bankruptcy as being your only option, then think again, and get in touch with us at Debtfix now – you’ll struggle to find anywhere else that provides this service and certainly no one out there with our reputation.
How does Bankruptcy work?
The bankruptcy process involves the Official Assignee taking control of your assets and debts, and working out the fairest way for you to repay some of what you owe to your creditors.
The Official Assignee might decide to raise funds through the sale of your assets, and you may also be required to contribute to your debts from your income, but only if this is affordable. At the end of the bankruptcy process, which lasts for three years, any remaining unsecured debt you owe to your creditors is written off.
Bankruptcy prevents your creditors from making further contact with you – they must instead mediate through the Official Assignee. However, do bear in mind that there are significant restraints whilst you are bankrupt, most likely limiting your ability to trade, obtain credit, act as a director, travel overseas and other restrictions.
The bankruptcy will appear on your credit file for 7 years. You will need to continue making payments to the secured debts then you don’t lose those items.
Who can benefit from Bankruptcy?
You can become bankrupt if you owe more than $1,000, but it's best for people who owe more than $47,000.
If you owe less than $47,000 you could consider a Debt Repayment Order (SIO) or a No Asset Procedure (NAP) instead.
Bankruptcy really should be the last resort. For most people, a Creditors Proposal will be the best option, so don’t file for bankruptcy before fully exploring the other options available to you.
Contact Debtfix now to help you through the minefield of managing debt and debt solutions.