Debt & Bankruptcy Lawyers Adelaide: Your Path to Financial Freedom

1. Contemplating Personal Bankruptcy in Australia?

Bankruptcy is a formal legal process under the Bankruptcy Act 1966 (Cth). While it offers a pathway to a fresh financial start, it should not be entered into lightly. We provide a full explanation of the advantages and disadvantages before you make a decision.

Advantages of Declaring Bankruptcy (via Debtor’s Petition)

• Debt Release: Most of your unsecured debts incurred prior to the date of bankruptcy are written off.
• Stop Creditor Harassment: Creditors and debt collectors are legally required to stop contacting you and must instead deal with your appointed Trustee.
• End to Legal Action: Unsecured creditors cannot pursue further legal action against you to recover debts.

The Disadvantages and Long-Term Consequences

It is crucial to understand the implications of bankruptcy before proceeding:

• Asset Seizure: Your Trustee in Bankruptcy may sell off non-exempt assets, which can include the family home (even if jointly owned). Certain items, such as household goods and tools of trade (up to a protected value), are exempt.
• Income Contributions: If your after-tax income exceeds a set threshold, you may be required to make compulsory payments to your Trustee for the benefit of your creditors.
• Professional Restrictions: You are generally not allowed to be a director of a company while bankrupt. Certain professional licenses (e.g., builders, real estate agents) may also be affected, resulting in a loss of your right to practice.
• Credit History & Public Record: Your name is permanently listed on the National Personal Insolvency Index (NPII). The bankruptcy is also recorded on your consumer credit report for five years.
• Travel Restrictions: You must obtain written consent from your Trustee to travel overseas.

Your standard bankruptcy period lasts for three years and one day, provided you fully co-operate with your Trustee.

2. What Debts Are (and Are Not) Written Off in Bankruptcy?

Understanding which debts are covered is critical to assessing if bankruptcy is the right solution.

We will thoroughly review your financial position to advise on the status of all your outstanding liabilities, including complex ATO tax debts.

1. What is bankruptcy?

Bankruptcy is a legal process where an individual who cannot pay their debts gives control of their finances to a trustee. It helps manage debts but has serious legal and financial consequences.

2. How do I declare bankruptcy?

You can apply online through the Australian Financial Security Authority (AFSA) or seek advice from a lawyer or accountant to ensure your application is correct and complete.

3. What debts are included in bankruptcy?

Most unsecured debts (credit cards, personal loans, and unpaid bills) are included. Secured debts like mortgages are handled differently, as are debts to the ATO in particular.

4. Can I keep my assets if I go bankrupt?

Some assets are protected (tools of trade, basic household items, and some superannuation), while others may be sold to pay creditors.

5. How long does bankruptcy last?

Standard bankruptcy lasts 3 years and 1 day, but it can be longer in certain circumstances. After discharge, most restrictions are lifted, but some records remain on credit reports.