Finances are the lifeblood of your business, yet they can be very difficult to navigate.
RSM have a team that specialises in individual insolvency solutions including bankruptcy services and personal insolvency agreements in Brisbane, Canberra, Melbourne, Perth, Sydney and Wagga Wagga.
- The release of debtors from their provable debts;
- The pooling of divisible property to meet the costs of the administration and repayment of debts in full or in part
- To provide alternatives to bankruptcy
- The administration of the Income Contribution regime which affects bankrupts whose after tax income is greater than the threshold amounts
- Limiting commercial activities by bankrupts and debtors during the period of bankruptcy or before the terms of a PIA are fulfilled
- The prosecution of offences arising before, during and after bankruptcy and in relation to Debt Agreements and PIA’s
There are two ways an individual or sole trader may become bankrupt under Part IV of the Bankruptcy Act .
Bankruptcy is a legal process where a bankruptcy trustee is appointed to administer an insolvent person’s affairs to provide for a fair distribution of that person’s divisible assets to their creditors.
Bankruptcy is a legitimate and just way for a debtor to resolve their debt problems, and it is one way for creditors to take action against someone for their unpaid debts.
Although bankruptcy can provide relief if you are unable to repay your debts, there are consequences that may affect you. Make sure you are aware of these consequences can help you decide if this is the best option for you.
Some of these consequences can include:
- Bankruptcy does not release you from all debts
Most unsecured debts are covered in bankruptcy - this means you no longer have to repay these debts. There are some exceptions.
- Bankruptcy affects your ability to travel overseas.
You must request permission from your trustee to travel overseas. It's an offence to travel overseas without consent in writing. Your trustee may ask for further details to consider your request.
- Bankruptcy may affect your income, employment and business.
If you earn over a set amount, you may need to make compulsory payments to your trustee. There may also be some restrictions on your employment and running a business.
When completing a Bankruptcy Form, you will need to give details of:
- your income
- your assets (things you own)
- your debts (money you owe)
- any businesses, companies and trusts that you're part of
- any court cases that you're involved in.
- To support the information you provide, you may need things such as payslips, Centrelink statements, bank statements, and account numbers.
If you can't pay your debts, you may be considering bankruptcy, or an alternative to bankruptcy called a 'debt agreement'. These are formal legal options available under the Bankruptcy Act 1966.
While these formal options may free you from debt, they will have serious long-term consequences. They could affect your career and your ability to get credit or loans in the future.
Explore all your options first
Before considering bankruptcy or a debt agreement, make sure you explore your other options for dealing with unmanageable debt.
Options could include:
- asking for more time to pay
negotiating a flexible payment arrangement
offering a smaller payment to settle the debt
Individuals, joint debtors and partnerships may also be made bankrupt by the Federal Court or Federal Circuit Court on the application of a creditor or group of creditors owed at least $5,000. The most common foundation for this type of action is where a creditor obtains judgment on their debt which remains unsatisfied. The creditor may then have the Official Receiver issue a Bankruptcy Notice, a demand to pay debt. Once the Bankruptcy Notice is served on the debtor he or she has 21 days in which to comply or challenge the Notice. Where there is noncompliance an Act of Bankruptcy occurs and the creditor may file a creditor’s petition with the Court seeking a sequestration order bankrupting the debtor.