FAQs

What happens to my debts after bankruptcy?

Your debts are all discharged, meaning they are written off by your creditor (the person or organization you owe them to). Of course if you have a secured debt, which is a debt that is secured against an asset, such as a Housing loan and you decide that you would like to keep the debt through your bankruptcy, then the Bank will maintain title over the asset and you won’t be discharged from that debt but will maintain it and as long as you keep paying it off you can maintain the asset.

All other debts will be written off except for a few such as fines for ​breaches of the law (eg: speeding fines), debts arising from fraud, maintenance payments and Child Support, some debts due to Centrelink and accumulated HECS (Higher Education Contribution Scheme).

Can I have an ABN during bankruptcy?

Yes you can. If you have an existing ABN when you become bankrupt, the trustee will advise the Deputy Commissioner of Taxation of your bankruptcy. The Tax Office will note the date of your bankruptcy against the ABN. If you wish to continue to use the ABN you will need to contact the Tax Office and arrange to have your ABN reactivated. Regardless of Bankruptcy you will still be responsible for lodging your BAS Statement.

There is no restriction on applying for an ABN after becoming a bankrupt.

Can I keep my tax refund?

If you owed the tax office at the time of your bankruptcy, any refund you are entitled to during the period of bankruptcy may be retained by the tax office to offset the amount owing. Tax refunds owing to you prior to the date of your bankruptcy can be claimed by the trustee. Tax refunds owing to you during your bankruptcy will be treated as income for income assessment purposes. After discharge, any debt still outstanding to the tax office which formed part of the bankruptcy cannot be recovered by the tax office. Tax refunds after discharge may be retained by you. Regardless of bankruptcy you are still responsible for lodging your Income Tax Returns.

Can I travel overseas?

Yes, however, you will need to let your Bankruptcy trustee know that you wish to travel overseas and obtain their permission. This is only for the term of the Bankruptcy and very very seldom is permission not granted for overseas travel to a bankrupt.

What happens to my debts after bankruptcy?

Your debts are all discharged, meaning they are written off by your creditor (the person or organization you owe them to). Of course if you have a secured debt, which is a debt that is secured against an asset, such as a Housing loan and you decide that you would like to keep the debt through your bankruptcy, then the Bank will maintain title over the asset and you won’t be discharged from that debt but will maintain it and as long as you keep paying it off you can maintain the asset.

All other debts will be written off except for a few such as fines for ​breaches of the law (eg: speeding fines), debts arising from fraud, maintenance payments and Child Support, some debts due to Centrelink and accumulated HECS (Higher Education Contribution Scheme).

How long will I be bankrupt for?

You will be Bankrupt for 3 years. It has been know, however Very rarely, that the Bankruptcy trustee will extend a persons bankruptcy for an additional period. This is usually due to some type of fraudulent activity performed during the period of Bankruptcy such as fraudulently applying for large loans etc. The normal period is exactly 3 years from the date of the filing of Bankruptcy.

Can I keep my house?

This depends on a number of factors but in many cases it can be arranged. If your home does not hold too much equity it is certainly possible for you to keep it and we will do what we can to help this to happen, if of course this is what you wish to happen. Be sure to call us if this is of concern to you or you can simply complete the Bankruptcy Evaluation test below and send us the information on your house and we will call you with our recommendations at no cost.

How much will it cost me to go Bankrupt?

The cost depends on how much needs to be done. We have “Do It Yourself Bankruptcy” where we provide you with the necessary paperwork, you complete it and return it to us for processing and lodgement. This is ideal for simple bankruptcies where there are no assets involved.

Bankruptcy costs increase according to the complexity of each individual case and once we have your information we can give you a firm price. Some of the factors that will affect the cost of a bankruptcy are:

  • The number and type of assets you own
  • Whether you are a company director.
  • Whether you are a sole trader or business owner
  • Whether you have dependent children or are subject to Child Support payments.

Call us or complete the “Bankruptcy Evaluation Test” and we can give you an accurate price.

What do I need to do to go Bankrupt?

We make the process of Bankruptcy as simple as possible for you. However, be sure to either call us or complete the Bankruptcy Evaluation test before you make any decisions.

Your Bankruptcy can all be completed on line with us. After we have collected the necessary information from you over the telephone, we then complete a number of forms with you, including a Bankruptcy application. You do not need to attend a meeting in our office, talk to the Police, get a Lawyer, talk to a Magistrate or any of those overwhelming tasks. We understand it is a stressful time and we will take care of everything for you.

Once we have collected your information and completed the necessary forms you will need to sign them. We will arrange for the forms to be delivered to you. You simply sign each form as required and then return it to us. We then lodge your forms with the necessary authorities and you usually receive your bankruptcy file number within a few days. That’s right, within a few days. At last it will all be over and you will be able to sleep in the knowledge that the slate has been wiped clean and that you are able to start again.

Do I have to go to court?

No! You won’t be dragged off to court, you won’t be charged as a criminal, you won’t have your name splashed all over the media and up in lights. The process of bankruptcy is a very personal process.

Yes, your bankruptcy will be recorded on your personal Credit file for 5 years, but all things going smoothly, your actual bankruptcy only goes for a period of 3 years and after 3 years from the date it is processed, you will be able to go out and apply for a loan or whatever you need. This is called your discharge date, or the date your Bankruptcy is discharged.

Once your Bankruptcy is discharged, you will not need to attend court. You will simply receive a letter informing you that your bankruptcy has now been discharged.

It is as though you have just been financially born again. A wonderful feeling.

How long does it take to go Bankrupt?

Once the paperwork is complete you can be filed for Bankruptcy within 72 hours. Once your bankruptcy application has been approved you will receive a Bankruptcy File Number and this number is given to your creditors (people you owe money to). Once they have your bankruptcy file number they are no longer allowed to contact you for payment. Imagine, suddenly no more harassing telephone calls or nasty letters. It all stops.

It may take a little longer if your case is very complicated, however, even in most complicated Bankruptcies, we can arrange your Bankruptcy within a week or so.

What happens to my assets?

That depends on what they are. If you own a house, a car, a boat, a jet ski, a motor bike or anything MAJOR in value you need to call us so that we can work out the best option for you.

In most cases you are able to keep your personal motor vehicle. This of course depends on the value of the vehicle but very seldom are cars lost through the process of Bankruptcy.

As for your household furniture, you will keep this. Bankruptcy is not as it used to be. In the past you would lose everything you owned of value. Today, you keep your household furniture and personal items. Yes, that includes your Big Screen TV and stereo!

If you are a Trades person or have tools of trade, in most cases you will also be able to keep most or all of these. Of course it is important for you to let us know what you have so that we can arrange this for you.

Many potential Bankrupts have heard horror stories and rumours of others who were kicked out of their rental home or booted out on to the street in a matter of days from the home they were buying, while someone came in and rifled through their personal household belongings. This doesn’t happen.Bankruptcy is an opportunity to start again, not a death sentence!

Also, If your partner owns any assets such as a house or car, these will not be affected by your bankruptcy.

How much can I earn as a Bankrupt?

Some people will tell you you can’t earn anything as a bankrupt because it all gets taken off of you… this is RUBBISH.

You can earn as much as you want as a bankrupt.

However, there are some earning “thresh holds” that apply to you for the term of your bankruptcy that you need to be aware of. Once you reach these thresh holds you will need to pay the Trustee (The trustee is the Individual or organization that is administrating your bankruptcy) 50% of everything you earn above this amount. This money is then paid back to your creditors (The people you owe money to).

Here are the thresh holds:
1. $1066.20 NET per week (that’s after tax and Child Support).

Remember, there is no limit to the amount that you can earn as a bankrupt, it simply means that anything you earn OVER that amount MAY be subject to you losing 50%.

If this thresh hold is a concern to you simply contact us and we can advise you on options that may be available to you.

The fact is you can earn as much as you want as a Bankrupt, hey even a Million dollars a year. Remember, you have no debt hanging over your head, so if you are having success in earning money, good luck to you! What’s exciting is that you can begin saving again!

What debts do I lose at Bankruptcy?

All debts accept for a very few are negated upon Bankruptcy. The only debts that are not negated are:

  • Any outstanding speeding fines.
  • Any debts owed to Centrelink.
  • HECS Debts (Tertiary Education Debts).
  • Child allowance debts.

Other than these few things, all your other personal debts are negated at Bankruptcy. You will be placed into the hands of a Trustee and they will ensure that you are not chased for debts that you have had negated at Bankruptcy. If someone bugs you, you simply report them.

Can I run a business after Bankruptcy?

The short answer to this question is yes. Many of our clients have run their own businesses for many years and continue to do so after they have declared themselves bankrupt. The only difference is that part of the bankruptcy regulation is that they are not able to be the “Director” of a company until their bankruptcy is discharged, which usually happens after a period of three years. During this time they trade as a sole trader, under their own name and as soon as their bankruptcy is discharged they restructure their business back into a company.