Voluntary Bankruptcy? An Option

If you find yourself in a situation where you are unable to pay your debts and wish to stop your creditors harassing you, you could opt for voluntary bankruptcy. There are specific forms and actions that you will have to complete to qualify for bankruptcy.

Once you have submitted the Debtor's Petition and Statement of Affairs forms to ITSA, a trustee will be appointed to handle your case. You will have the opportunity to choose a trustee at the time of the submission of the forms. In the event that you do not select a trustee, the government organization ( ITSA )will allocate one for you. Your creditors can petition to have your trustee changed.

All your current debts should be included in a bankruptcy. This includes credit cards, store cards, personal tax debts, unsecured personal loans, repossessed car loan and GST debts, to name a few. Debts that are not included in a bankruptcy include child maintenance and support, penalties and fines that have been Court imposed and student loans. Current bills like your telephone and electricity should not be included in this action. If you include them, the services may be disconnected.

Your trustee may sell your assets and use the money to pay your debts. Household items like furniture and appliances will not be sold. Tools of your trade up to a certain value will be protected. A motor vehicle up to a certain wholesale price will also be protected.

Bankruptcy should not affect your employment status. No income restriction will be imposed, however if you earn more than a specified income, you will have to contribute a portion of your income to your creditors.( 50% of any earnings ovrt the current threshold ) If you wish to run a business during this period of bankruptcy, you will have to operate under your own name as a sole trader.

If you have listed the tax office as a creditor in your petition, any refunds that you are due to get will be retained by them. Any debt that is still owing to them will be written off after a period of three years. Any tax refunds after this period can be kept by you. You will still have to submit tax returns.

The consequences of this action are serious. A permanent record of the event is kept on the National Personal Insolvency Index and creditors will be notified of your bankruptcy. Your credit score will also be affected by this action. In view of the harmful consequences attached to bankruptcy, you should consult with a professional who will be able to provide you with suitable debt counseling as well as effective solutions to your problem. You may be able to avoid bankruptcy.

If you need help and you’re in a situation where you might need to file for bankruptcy, give us a