Bankruptcy in Sydney - does it matter if it is voluntary?

When it comes to Bankruptcy Sydney, quite often people aren't aware that there may be both voluntary, and involuntary bankruptcy - both of these have different approaches and policies.

Involuntary bankruptcy occurs when a person you owe money to applies to the court to declare you bankrupt. Normally when you get one of these notices, you have normally 21 days to pay all the debt. If you don't, then the creditor goes back to the court and requests the court to issue a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the documentation in then afterwards you are bankrupt.

You can object to a bankruptcy notice by going to court after the 21 days have expired and put your case forward, to stop it going to the next level. Apart from the way you became bankrupt there is in fact no distinction between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're overseen to in the exact same way.

However, when it concerns Bankruptcy for this, the stress and anxiety, torment and fear that accompanies this process is incredible. If you think you are in all likelihood to be made bankrupt by someone, get some suggestions and act on that advice. Generally I've found it's always more effective to know what you can and can't do before you have someone else bankrupt you. Once you are bankrupt, it's normally far too late.

Voluntary Bankruptcy

On the other hand, when it comes to Bankruptcy, sometimes there are times that it is the most ideal option. So you may have to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the very same for each person of course, but more often than not I find that one way you could work it out is to figure out just how long it will take you to pay every one of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may help you make that decision, and help you to understand Bankruptcy.

Once, I had an 80 year old pensioner, who came to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the rate she was paying her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can really help you think this through. If you move house and fail to remember to pay your $30 phone bill for 6 months more, it's very likely the phone service will default your credit file. That default will sit on your file for 5 years, so for $30 you can have your credit file seriously damaged for that period of time - and all of this will impact how you need to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is unjust. The punishment doesn't seem to match the crime in my book. So if you already have defaults on your credit report for 5 years, remember that bankruptcy is on your credit file for a total 7 years then its rubbed out completely.

So if your credit rating is a big element in trying to decide whether to participate in a Debt Agreement or Personal Insolvency Agreement or Bankruptcy remember they will all sit on your credit file for a total of 7 years. The biggest variation is that with a DA or PIA you pay back the money and nevertheless have it on your file for 7 years.

Bankruptcy

I have mentioned the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the part more people are afraid of when they come to me to discuss their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this specific country the provisions are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all finished with no strings attached. As compared to countries like the United States, our bankruptcy laws are very reasonable.

I don't claim to know why that is but a couple of hundred years ago debtors went to prison. Nowadays I suppose the government feels the sooner it can get you back on your feet working and paying tax, the better. It makes more sense than locking you up which costs the taxpayer anyway.

Bankruptcy wipes all your debts including ATO debts with the exception of a few things:

·         Centrelink Debts, Court Fines like parking and speeding fines.

·         HECS or Fee Help loans.

·         Money to pay for a car accident if the car was not actually insured.

There is a lot more that can be said about doing this and Bankruptcy in general but the objective of this blog was to help you decide between a few readily available options. When getting some advice, always remember that there are always possibilities when it relates to Bankruptcy in Sydney, so do some research, and Good luck!

If you want to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to talk to Bankruptcy Advice Sydney on 1300 879 867, or visit our website: bankruptcy-advice.com.au/Sydney .