Bankruptcy

Key Features of Bankruptcy

  • All unsecured debt is legally written off instantly
  • 99% of people will make no ongoing payments
  • Lasts for 3 years
  • Creditors no longer able to contact you or pursue any legal action
  • Your Super Annuation is protected
  • Beyond Debt can complete the necessary legal documents


Bankruptcy Summary:

Bankruptcy is not designed as a punishment. It is more like a financial “reset button”. The Bankruptcy Act was introduced in 1966 to help Australians who through no fault of their own find themselves in a position where they will never be able to repay their debts.  If you are in a position like this and you can not arrange a debt agreement, bankruptcy may be a solution.

How long does bankruptcy last?

Bankruptcy is broken up into 2 periods. An “undischarged bankruptcy” period that lasts for three years, during which time the restrictions imposed by the bankruptcy act apply, and a “discharged bankruptcy” period which last for a further 4 years but no restrictions apply.  All bankruptcies are recorded permanently on a historic government database called the National Personal Insolvency Index (NPII).

What debts are cleared by bankruptcy?

Most debts can potentially be cleared by bankruptcy. All unsecured debts (Credit Cards, Personal Loans, tax bills) can be cleared by bankruptcy. However child support, HECS/HELP and Fines can not be included in bankruptcy

How much can I earn while in bankruptcy?

Bankruptcy isn’t a punishment. However it is reasonable that creditors should get some money if the person filing for bankruptcy is a high income earner. During the “undischarged bankruptcy” period (3 years) you will be asked to make “bankruptcy income contributions”. Above a certain threshold 50% of your after tax wage goes to your creditors.

The Current Bankruptcy Income Thresholds:

  • No Dependants $849.80/week after tax
  • One Dependant $1,002.76/week after tax
  • Two Dependants $1,079.24/week after tax
  • Three Dependants $1,121.73/week after tax
  • Four Dependants $1,138.73/week after tax
  • More Than Four Dependants $ 1,155.73/week after tax

example:
you have no dependents and earn $874.30 per week.
$874.50-$849.80 (income threshold) = $24.50
50% of $24.50 = $12.50
Creditors contribution per week = $12.50

How do I file for Bankruptcy?

  • Beyond Debt can assess your financial situation
  • You formally engage us to act on your behalf
  • Beyond Debt deals with your creditors on your behalf
  • Beyond Debt prepare and lodges you bankruptcy documents.
  • Once your bankruptcy has been accepted, your creditors are notified and must cease all collection activity and contact with you.

The legislation surrounding bankruptcy is complicated. However, our consultants would be happy to answer any queries.  Remember, bankruptcy should be considered as a last resort only.

Bankruptcy is only one option in a range of debt solutions.   For information on the range of options available take a look at our Debt Solutions page. You must determine whether the information is appropriate in terms of your particular circumstances.