What is bankruptcy?
Bankruptcy is a legal process that can be very complicated. However, for most people it won’t be. With the right advice and assistance it could be your chance to reset your financial position and start again.
So what is it? In its simplest terms bankruptcy allows your debt/s to be wiped but you also lose your assets and investments and some of your income so that those debt/s can be paid or partially paid.
That sounds pretty bad, doesn’t it. There are a number of things that make it pretty good for some people.
Firstly, your personal items and household furniture are all protected. This means you keep them.
Secondly, you can keep a car or cars with a combined value of $8,100.00 or if you are paying off your car and want to keep it as long as you keep paying the payments, you will probably be able to keep it (this is subject to certain criteria).
Thirdly, most people don’t pay anything from their income. For everyone the first $1,145.00 (after tax per week) is protected and up to $1,557.00 (after tax per week) is protected depending on how many dependants you have.
Lastly, most of your debts will be wiped. You will not have to pay them EVER again. HECS/HELP, Child Support and court imposed fines are not wiped.
If you are self-employed you can continue your business subject to some conditions and you can keep tools of trade up to a prescribed amount.
The downside for all bankrupts is that your credit score is affected for 5 years.
You will be bankrupt for three years and during this period you can’t accumulate assets or investments. If you win or inherit money during this 3 years the money will go to paying your bankruptcy first.
Overseas travel is allowed but you have to get permission and that will cost at least $150.00.
The above is a simplified explanation as to what you can expect. It can’t cover every aspect that applies or might apply to you.
Seek professional advice before you make any decision.
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