Bankruptcy Advice Centre

BANKRUPTCY - FAQ

Q 1. What is bankruptcy?
Q 2. How is a person made bankrupt?
Q 3. Are there any limitations in going bankrupt?
Q 4. How do I go bankrupt?
Q 5. What does it cost?
Q 6. How long will I remain bankrupt?
Q 7. What is the effect of going bankrupt?
Q 8. Will bankruptcy affect my employment?
Q 9. Can the Trustee take any of my income?
Q10. Does bankruptcy affect my credit rating?
Q11. Can I get credit whilst Bankrupt?
Q12. What happens to assets?
Q13. Can my bankruptcy be cancelled?
Q14 Can I travel overseas?
Q15. Where can I go to get more information?

Q1. What is bankruptcy?

Bankruptcy is a process that provides protection to people who are unable to repay their debts and they cannot reach an informal or formal agreement with creditors.

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Q2.How is a person made bankrupt?

There are two ways a person can be made bankrupt.

Voluntarily by completing and lodging the relevant documents.

By order of the Court, at the instigation of a creditor, who is owed more than $2,000.

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Q3. Are there any limitations in going bankrupt?

As a general rule no, there are no income, debt or property limits but a person must be residing in Australia, or have a dwelling or business in Australia.

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Q4.How do I go bankrupt?

You must complete and lodge the following forms directly with ITSA or through a Registered Trustee, such as G T Lean & Associates

Debtor’s Petition

Statement of Affairs

Acknowledgement that the “Prescribed Information” has been received and read.

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Q5.What does it cost?

There is no filing fee to go bankrupt.

A Registered Trustee is entitled to a minimum remuneration (See Current Amount ). Fees can be taken out of the proceeds of the sale of property or funds received from a bankrupt and generally need creditor’s approval.

G T Lean & Associates does not charge an up front fee or a fee for providing assistance to prepare the bankruptcy documents.

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Q6. How long will I remain bankrupt?

If you fully co-operate with your Trustee the Bankruptcy will only last for three years, although it can be extended to five or eight years in certain circumstances.

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Q7.What is the effect of going bankrupt?

Creditors are generally unable to continue or commence action to recover debts but there are some exceptions

Fines or penalties imposed by a Court (or similar) are not covered.

Child maintenance or maintenance orders must be paid

HECS obligations and some Social Security overpayments cannot be included

Debts incurred by way of fraud are generally only covered during the period of bankruptcy after which they must be paid.

The rights of secured creditors are not affected by bankruptcy and they can repossess property if you default with loan repayments any resulting shortfall would be covered.

Council Rates and Water Rates must be paid

Guarantors or joint borrowers are still liable for the full debt, unless they also go bankrupt.

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Q8. Will bankruptcy affect my employment?

The Bankruptcy Act does not restrict employment BUT typically a bankrupt will not be employed in certain industries such as the Police Force or as a security guard. A bankrupt cannot hold certain licenses, such as a liquor license, tax agents license, real estate (principal) license, builders license, finance brokering license etc.

A bankrupt cannot be a director of a company without approval of the Court.

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Q9. Can the Trustee take any of my income?

If you have no dependants and earn more than the Current Amount per year, you will be required to make compulsory payments to your Trustee.

The threshold increases if you have any dependants residing with you or you are required to pay child maintenance.

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Q10. Does bankruptcy affect my credit rating?

Your name and some personal details will be recorded on a national Commonwealth Government data base (National Personal Insolvency Index - NPII) and will remain on this data base indefinitely.

The NPII is a public record and it can be accessed (on the payment of a fee) by any person or organisation.

Your name and some personal details will be recorded on various credit reference agencies data bases and will remain for seven years.

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Q11.Can I get credit whilst Bankrupt?

You can apply for credit but approval is at the financial institutions discretion.

It is your obligation to disclose that you are bankrupt.

If you buy certain assets during your bankruptcy, they may be claimed and sold by your Trustee.

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Q12.What happens to assets

Your basic furniture and effects, excluding valuable antiques, paintings, valuable jewellery, are protected and cannot be taken.

a vehicle which is used a means of transport (eg. car or motor bike), is protected and can be retained by you where your interest in the vehicle is less than the Current Amount

Superannuation and life assurance are generally protected.

Compensation for personal injury is protected.

Tools of Trade used to earn income up to the value of Current Amount are protected.

Property held in trust for others is protected.

A residential property (with the exception of a Defence Service home), investment property, shares and vehicles and boats can be sold at the Trustees discretion. In certain cases there are other options available which you should discuss with us.

Payments to secured creditors must still be maintained.

Business assets can be sold.

Note: Any property you may have disposed of for less than market value within a certain period prior to bankruptcy may be able to be claimed by the trustee.

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Q13.Can my bankruptcy be cancelled?

It is very difficult to cancel a bankruptcy once it has been accepted.

A bankruptcy can be annulled in the following circumstances:

Provable debts including interest where applicable, Trustees fees and Government charges are paid in full.

Creditors accept a composition in full satisfaction of outstanding debts.

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Q14.Can I travel overseas?

Any person who is an undischarged bankrupt must obtain written permission from their trustee to leave Australia well in advance of the proposed departure giving reasons for departing Australia, dates of departure and return, itinerary, particulars about who will fund travel costs by providing all documentary evidence. eg confirmation by an employer of the need to travel, confirmation of payment of costs by a third party

If you leave Australia without your trustee's permission or do not return when you said you would or do not return when your Trustee asks you to, your trustee may lodge an objection to your discharge and your bankruptcy will be extended.

Permission is not required once a person is discharged from bankruptcy or the bankruptcy has been annulled.

A debtor who has entered a formal arrangement with creditors under either a Part IX debt agreement or a Part X Personal Insolvency Agreement is not restricted from leaving Australia.

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Q15. Where can I go to get more information?

You can contact John Sherwood or Ross Thomson at G T Lean & Associates on:
1800 738 353 Freecall

(08) 9227 8353 (WA office hours)

e-mail mail@bankruptcyadvice.com.au

complete and submit the enquiry form
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	BANKRUPTCY - FAQ Q 1. What is bankruptcy? Q 2. How is a person made bankrupt? Q 3. Are there any limitations in going bankrupt? Q 4. How do I go bankrupt? Q 5. What does it cost? Q 6. How long will I remain bankrupt? Q 7. What is the effect of going bankrupt? Q 8. Will bankruptcy affect my employment? Q 9. Can the Trustee take any of my income? Q10. Does bankruptcy affect my credit rating? Q11. Can I get credit whilst Bankrupt? Q12. What happens to assets? Q13. Can my bankruptcy be cancelled? Q14 Can I travel overseas? Q15. Where can I go to get more information? Q1. What is bankruptcy? Bankruptcy is a process that provides protection to people who are unable to repay their debts and they cannot reach an informal or formal agreement with creditors. Back To Top Q2.How is a person made bankrupt? There are two ways a person can be made bankrupt. Voluntarily by completing and lodging the relevant documents. By order of the Court, at the instigation of a creditor, who is owed more than $2,000. Back To Top Q3. Are there any limitations in going bankrupt? As a general rule no, there are no income, debt or property limits but a person must be residing in Australia, or have a dwelling or business in Australia. Back To Top Q4.How do I go bankrupt? You must complete and lodge the following forms directly with ITSA or through a Registered Trustee, such as G T Lean & Associates Debtor’s Petition Statement of Affairs Acknowledgement that the “Prescribed Information” has been received and read. Back To Top Q5.What does it cost? There is no filing fee to go bankrupt. A Registered Trustee is entitled to a minimum remuneration (See Current Amount ). Fees can be taken out of the proceeds of the sale of property or funds received from a bankrupt and generally need creditor’s approval. G T Lean & Associates does not charge an up front fee or a fee for providing assistance to prepare the bankruptcy documents. Back To Top Q6. How long will I remain bankrupt? If you fully co-operate with your Trustee the Bankruptcy will only last for three years, although it can be extended to five or eight years in certain circumstances. Back To Top Q7.What is the effect of going bankrupt? Creditors are generally unable to continue or commence action to recover debts but there are some exceptions Fines or penalties imposed by a Court (or similar) are not covered. Child maintenance or maintenance orders must be paid HECS obligations and some Social Security overpayments cannot be included Debts incurred by way of fraud are generally only covered during the period of bankruptcy after which they must be paid. The rights of secured creditors are not affected by bankruptcy and they can repossess property if you default with loan repayments any resulting shortfall would be covered. Council Rates and Water Rates must be paid Guarantors or joint borrowers are still liable for the full debt, unless they also go bankrupt. Back To Top Q8. Will bankruptcy affect my employment? The Bankruptcy Act does not restrict employment BUT typically a bankrupt will not be employed in certain industries such as the Police Force or as a security guard. A bankrupt cannot hold certain licenses, such as a liquor license, tax agents license, real estate (principal) license, builders license, finance brokering license etc. A bankrupt cannot be a director of a company without approval of the Court. Back To Top Q9. Can the Trustee take any of my income? If you have no dependants and earn more than the Current Amount per year, you will be required to make compulsory payments to your Trustee. The threshold increases if you have any dependants residing with you or you are required to pay child maintenance. Back To Top Q10. Does bankruptcy affect my credit rating? Your name and some personal details will be recorded on a national Commonwealth Government data base (National Personal Insolvency Index - NPII) and will remain on this data base indefinitely. The NPII is a public record and it can be accessed (on the payment of a fee) by any person or organisation. Your name and some personal details will be recorded on various credit reference agencies data bases and will remain for seven years. Back To Top Q11.Can I get credit whilst Bankrupt? You can apply for credit but approval is at the financial institutions discretion. It is your obligation to disclose that you are bankrupt. If you buy certain assets during your bankruptcy, they may be claimed and sold by your Trustee. Back To Top Q12.What happens to assets Your basic furniture and effects, excluding valuable antiques, paintings, valuable jewellery, are protected and cannot be taken. a vehicle which is used a means of transport (eg. car or motor bike), is protected and can be retained by you where your interest in the vehicle is less than the Current Amount Superannuation and life assurance are generally protected. Compensation for personal injury is protected. Tools of Trade used to earn income up to the value of Current Amount are protected. Property held in trust for others is protected. A residential property (with the exception of a Defence Service home), investment property, shares and vehicles and boats can be sold at the Trustees discretion. In certain cases there are other options available which you should discuss with us. Payments to secured creditors must still be maintained. Business assets can be sold. Note: Any property you may have disposed of for less than market value within a certain period prior to bankruptcy may be able to be claimed by the trustee. Back To Top Q13.Can my bankruptcy be cancelled? It is very difficult to cancel a bankruptcy once it has been accepted. A bankruptcy can be annulled in the following circumstances: Provable debts including interest where applicable, Trustees fees and Government charges are paid in full. Creditors accept a composition in full satisfaction of outstanding debts. Back To Top Q14.Can I travel overseas? Any person who is an undischarged bankrupt must obtain written permission from their trustee to leave Australia well in advance of the proposed departure giving reasons for departing Australia, dates of departure and return, itinerary, particulars about who will fund travel costs by providing all documentary evidence. eg confirmation by an employer of the need to travel, confirmation of payment of costs by a third party If you leave Australia without your trustee's permission or do not return when you said you would or do not return when your Trustee asks you to, your trustee may lodge an objection to your discharge and your bankruptcy will be extended. Permission is not required once a person is discharged from bankruptcy or the bankruptcy has been annulled. A debtor who has entered a formal arrangement with creditors under either a Part IX debt agreement or a Part X Personal Insolvency Agreement is not restricted from leaving Australia. Back To Top Q15. Where can I go to get more information? You can contact John Sherwood or Ross Thomson at G T Lean & Associates on: 1800 738 353 Freecall (08) 9227 8353 (WA office hours) e-mail mail@bankruptcyadvice.com.au complete and submit the enquiry form Back To Top