Most Australian’s have only really considered bankruptcy when playing a game of Monopoly with their mates! In spite of this, there are approximately 13,000 individuals that file for bankruptcy yearly in Australia. It’s extraordinary how fast individuals can go from enjoying a balanced financial position to facing a mountain of debt. In many cases, events such as loss of employment, divorce, or unexpected medical expenditures will induce serious financial complications within just a couple of months. Rather than wrestling with these debts for many years and ignoring the elephant in the room, it’s much better to cut your losses and seek financial guidance as soon as possible.
A few months ago, the Australian Government proposed changes to bankruptcy laws that reduce the bankruptcy duration from 3 years to 1 year. If this proposal is passed, it will have a remarkable impact on the stigma linked to bankruptcy and the financial penalties that bankrupts will encounter down the road. While lots of people understand the notion of bankruptcy, lots of individuals wouldn’t know where to start if they decided that filing for bankruptcy is the best option for them. To offer some insight, here are the top 5 tips on how to declare bankruptcy in Australia.
- Get advice from a registered bankruptcy trustee
If you’ve decided that bankruptcy is the best alternative for you, always seek advice from a registered bankruptcy trustee prior to making any concrete decisions. There is a tremendous difference between a firm that charges you to declare bankruptcy and a legally registered bankruptcy trustee firm. In many cases, bankruptcy firms are not the same as registered bankruptcy trustee firms, so make sure you get the right advice the first time so you can make the best financial decision. The right advice will not only aid you with your decision-making, but also put you in the best position to make a complete recovery after you have been discharged.
- Download the forms required to file for bankruptcy
If you’ve decided that bankruptcy is the best option for your individual position, there are two sets of documents that you will need to complete for you to declare bankruptcy:
- The Debtor’s Petition, which is a 3 page document (click here to download: https://www.afsa.gov.au/insolvency/how-we-can-help/forms-list/debtors-petition).
- The Statement of Affairs, which is a 25 page document (click on this link to download: https://www.afsa.gov.au/insolvency/how-we-can-help/forms-list/statement-affairs).
- Gather your supporting documents.
In nearly all bankruptcy proceedings, individuals need to present evidence that their claims are correct by supplying various supporting documents. Usually, this will include the following:
- Income statements and personal tax returns
- Company tax returns (if you are a company owner)
- Centrelink benefits statement (if applicable)
- Formal child support notices
- Any family law orders
- Any court orders
- Wills of any deceased estate of which you are the beneficiary
- All transaction statements from transferred assets over the last 5 years
It is integral to note that failure to deliver accurate information or any effort to hide information that would otherwise relate to your bankruptcy case is a severe offence that is punishable in a criminal court.
- Complete the bankruptcy paperwork.
You must respond to each and every question in your bankruptcy paperwork accurately and truthfully to ensure it gets processed properly. It is essential that you include the address information of all your lenders in the secured and unsecured sections of the bankruptcy paperwork. In the Debtor’s Petition, you’ll need to provide at least two types of ID. If you’re uncertain of which forms of ID are accepted, check the AFSA website (https://www.afsa.gov.au). If you run out of space when addressing any questions, simply print out another copy of that page and use it to fill out extra information. Also, be careful to include all assets sold in the last 5 years in question 33.
- Lodge your bankruptcy paperwork.
Before you lodge your bankruptcy paperwork, check the date to ensure you are lodging it within 28 days of you signing it. At Bankruptcy Experts Northern Rivers, we understand that all the paperwork can be a bit over-bearing, so if you have any inquiries regarding your any of your answers, it’s best to give us a call on 1300 795 575 to ensure you get it right the first time. Alternatively, visit our website for further information: www.bankruptcyexpertsnorthernrivers.com.au.