What is Bankruptcy? Bankruptcy is a legal process where a person or an entity is declared unable to repay their debts to their creditors.Bankruptcy is often viewed in a negative light; however, it can release you from most debts, provide relief and allow you to have a fresh start.
A person can be made bankrupt:
by a creditor who obtains an order from the Court for the person to be sequestrated (bankrupted); or
by voluntarily declaring themselves bankrupt through a debtor’s petition.
Bankruptcy typically lasts for a period of 3 years and 1 day.
Once declared bankrupt a trustee is appointed to their bankrupt estate.The trustee, either an Official Trustee (government body) or a registered trustee (private firm), manages the bankruptcy.
Things You Should Know Before Declaring Bankruptcy
Before declaring bankruptcy, it is important that you seek advice from your accountant, financial planner, lawyer or an insolvency professional.Safeguard Insolvency can provide you with the advice you need and present the best option for you to deal with any unmanageable debts.
Some things you should know before declaring bankruptcy include:
Often bankruptcy can be avoided.Bankruptcy is just one means of dealing with your debts.Other formal options include negotiated arrangements and debt agreements.
Bankruptcy can impact your ability to obtain credit, travel overseas or hold certain types of employment.
Bankruptcy does not release you from all debts.While Bankruptcy does release you from liability for most unsecured debts, there are exceptions.
Your name will permanently appear on the National Personal Insolvency Index (NPII).
Bankruptcy can affect your ability to obtain credit.If you apply for credit over a set amount, you must disclose your bankruptcy.
Credit reporting agencies keep a record of your bankruptcy for (1) 5 years from the date of bankruptcy; or (2) 2 years from when the bankruptcy ends, whichever is later.
Obtaining advice from qualified professionals before declaring bankruptcy is advised.
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