The stress of major debt — and the incessant requests of debt collectors — can be unmanageable for many people. Once you file for either Chapter 7 or Chapter 13 bankruptcy , bill collectors have to stop contacting you. This in and of itself can do a lot to reduce your stress. Bankruptcy is complicated and a major decision that can have wide-reaching effects on your life. Be sure to talk through everything with a bankruptcy attorney to make sure you fully understand the responsibilities and repercussions before you file.
Contact Us FAQs. Have I exhausted all other options?
There are a lot of things you can do to avoid bankruptcy. Make sure you consider these steps: Contact your lenders to see if they can work out a payment plan.
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Most lenders would much rather do this than have to forgive your debt completely when you file for bankruptcy. Sell some of your assets. You may be surprised at how much cash you can raise to pay off your debts. Eliminate all unnecessary expenses. When you go bankrupt almost all of your debts are written off. Deciding to go bankrupt is a big step that involves fees and can impact different areas of your life, such as your job or home. Assets you own, such as your house or car will usually be sold to pay off your debts. This means if your assets are worth more than your debts, or if all of your regular payments are up to date and you can afford to keep paying them, bankruptcy is unlikely to be the best option for you.
StepChange really help and make a huge difference" Anonymous, Angus. This allows you to make a fresh start. If you go bankrupt you may find it difficult to take out any further credit, as bankruptcy will remain on your credit file for six years. What debts are included in bankruptcy? Bankruptcy will write off most of your debts. Can you petition for joint bankruptcy? You can include joint debts in a bankruptcy but this will impact the other person on the credit agreement.
Of course, you must continue to pay certain debts such as your utility bills and any additional debts you incur after your bankruptcy commences. When you become a bankrupt some of your assets can be retained because they are protected property and some may be recovered by your trustee and sold.
An asset is defined as anything of value you own when you become a bankrupt and anything you buy or receive before the end of your bankruptcy. When you become a bankrupt what you may keep includes:. Before you file for bankruptcy make sure you thoroughly investigate exactly what assets are protected and those which are not.
Some assets are protected under bankruptcy and those, which you can generally keep, are listed above. However, there are other assets which your trustees can recover. Examples of these assets include:. Your trustee has to deal with any equity or interest you have in a property for the benefit of your creditors. This may mean that the property has to be sold.
If the property is jointly owned the trustee may consider selling his interest in your property to a non-bankrupt joint owner. Alternatively, the joint owner provided they are not bankrupt may make an offer to purchase the trustee's interest in the property. Once you become bankrupt, a vehicle which is used primarily as a means of transport eg. Where the interest in the vehicle is valued at more than the prescribed amount the trustee is required to sell, and give back to you the value of the prescribed amount and retain the balance for your creditors.
Generally, yes. They will still have a liability for the total amount outstanding on all debts incurred in joint names. Bankruptcy does not affect the rights of a creditor to claim under a guarantee. The creditor is entitled to recover payment from the guarantor. Once payment has been made, the guarantor steps in the shoes of the creditor and is able to lodge a claim in your bankruptcy for the debt paid.
If you are already insolvent, that is you cannot pay your debts, you should not incur further credit because if you become bankrupt it may be an offence under the Bankruptcy Act, and you may be prosecuted. If you forgot about a debt and remember it later, you should contact your trustee as soon as possible so that it may be added to your list of creditors.
Failure to disclose debts could extend your bankruptcy to 5 years. The Bankruptcy Act prevents creditors from recovering money from you. An exception is a secured creditor with whom you have made arrangements to retain the secured property. If other creditors attempt to recover money from you, you should advise them of your bankruptcy, and if they continue to insist you should notify your trustee. It is a matter for the issuing bank or finance company as to whether they are prepared to continue to extend credit to you. All creditors at the date of bankruptcy should be listed on your Statement of Affairs and they will be notified of your bankruptcy.
It is an offence for you to incur credit over a set limit without disclosing to the person you are dealing with that you are an undischarged bankrupt.
Are You Considering Bankruptcy?
Your bankruptcy may prevent you from undertaking employment in certain occupations or holding various licences. We advise that you contact any professional bodies that you are registered with to ensure that there are no restrictions in continuing your employment in the event that you become bankrupt. It is still your responsibility to lodge taxation returns. If you earn an income above an indexed statutory amount you are obliged to make regular payments or "contributions" to the trustee for the benefit of creditors.
As contributions are enforceable at law if payments are not made voluntarily the trustee can issue a notice on your employer to garnishee your income. When you are borrowing money, purchasing goods on credit or incurring credit in any way exceeding a prescribed amount indexed it is an offence unless you inform the person you are dealing with that you are an undischarged bankrupt.
Should I File for Bankruptcy?
You can still operate a business while bankrupt. If you trade under an assumed name or business name either as a sole trader or in partnership, you have to disclose to all your bankrupt status. You cannot be a director of a company or be involved in its management without the permission of the Court. If you wish to travel overseas you must obtain written approval of the trustee administering your estate. The creditors are notified in writing as soon as possible by the trustee and informed of the assets and liabilities disclosed by you on your statement of affairs.
When you become a bankrupt your name will be on the public record NPII forever. Your name will be on a commercial credit reference for 5 years even if your bankruptcy has been discharged.