What Is It Like To Go Bankrupt?

There’s no question that bankruptcy isn’t the most desirable situation to be confronting. There are some serious financial penalties involved and it’s a very demanding and stressful process that will affect you financially for several years to come. Ending up in mountains of debt can come about in the blink of an eye, and many individuals end up in this situation due to a multitude of factors. Not being able to work resulting from illness is one of the most common reasons why people file for bankruptcy. It’s not as if they had any control over the circumstances, but being unable to repay their debts considering that they have no income is the hard reality they have to face. In reality, 7,900 people in Australia declared bankruptcy in the March 2017 quarter1, so it’s not as uncommon as some people may think. If you ask me, I think that bankruptcy is neither good nor bad. Of course, those who file for bankruptcy have made some poor financial decisions and will penalised appropriately, however declaring bankruptcy is also the first step to financial freedom. Lots of individuals struggle for years just to make ends meet, while their debts keep compounding, so in a lot of cases, bankruptcy is a chance for a clean slate for those individuals that are unable to repay their debts.


Even though I’ve never been bankrupt personally, I’ve witnessed the journey of lots of individuals who have and surprisingly, the majority of people are better off and glad they went through the process. If you’re enduring financial problems and contemplating bankruptcy, this blog will explain what life is like after you declare bankruptcy.


You Won’t Be Debt Free By Declaring Bankruptcy


Bankruptcy is relatively complicated, and there is a general misconception that all debts are cleared by declaring bankruptcy. This is definitely not the case. There are several debts that won’t be eliminated, for example Centrelink debts, HECS debts, child support, court imposed fines (for example speeding tickets), and also money that is owed to an insurance company resulting from a car accident where you were uninsured and in the wrong. But, filing for bankruptcy will remove debts such as credit cards, GST and tax, and unsecured personal loans. The fact is, you will still have debts to pay after you declare bankruptcy, but the most substantial debts in many cases, such as credit cards, will be eliminated.


Feelings Of Remorse And Shame Are Standard


Bankruptcy is an arduous process and lots of people who declare bankruptcy have feelings of remorse and embarrassment; as if they’ve lost in life. This is quite standard, however it’s critical to overcome these emotions because the reality is, humans make errors, and bankruptcy is a way that you can go back to square one financially and get your life back on track. The sooner you recover from these feelings of guilt, the sooner you’ll be able to start the recovery process and develop a plan of how you’re going to repay your remaining debts and rebuild your credit rating. Always remember, bankruptcy lasts for three years and after seven years, it will no longer appear on your credit report, so it’s certainly not the end of the world.


You Can’t Borrow Any Money For Three Years


Unfortunately, by declaring bankruptcy you won’t be able to borrow any money under any circumstances for three years. During this time, it’s essential that you start rebuilding your credit report by maintaining a stable income and paying your bills and remaining debts on time. It’s simple but effective. After this three-year process, you become a discharged bankrupt and will have the opportunity to obtain loans for secured assets like houses and cars, but your interest rates will be much higher because of your poor credit history. Although it’s not always appropriate to secure loans straight away, it is possible. After seven years from the time you became bankrupt, your credit rating will be clean, and you will have the option to obtain all sorts of loans again at competitive rates.


Life after declaring bankruptcy obviously isn’t easy, but the emotional relief that most people experience after starting the process definitely softens the blow. There are some major financial consequences involved, but filing for bankruptcy is the first step towards financial freedom and securing a bright future for you and your family. If you’re confronting financial problems, it’s always best to seek professional advice sooner rather than later. Whatever you do, don’t keep struggling financially for years because you’re afraid of the stigma associated with bankruptcy. It’s difficult, but it’s also not the end of the world. If you ‘d like to talk to someone about your financial condition, get in contact with Bankruptcy Australia on 1300 795 575 for a confidential discussion, or alternatively visit their website for more information: www.bankruptcy-australia.net.au






Bankruptcy in Australia – What To Understand about Debt Collection

Many people face financial hardship at some point in their lives, and most of these folks are quite likely to be familiar with debt collectors. A debt collector is an individual whose job is to collect debts on behalf of a firm. A debt collector can either be an employee of an enterprise you owe money to, or they could be a third party working for a creditor. As you can picture, it’s not a simple job to squeeze money out of people who simply have none. It would be fair to say that many people in debt are already strained about their financial situation, and other people phoning them to remind them of this doesn’t always end smoothly. Consequently, debt collectors have a lot of adverse associations. There have been numerous cases of people being harassed by debt collectors so it’s important that individuals who are being contacted by debt collectors understand their rights and effective ways to manage these kinds of interactions.


Learn about Your Legal Rights.


Understanding what debt collectors can and can’t do is very important in having the capacity to effectively manage any interactions you may have with them. Under Australian Consumer Law, a debt collector must not:


Use any physical force or coercion (forcing you to do something).

Hassle or harass you to an unreasonable extent.

Mislead or deceive you (or attempting to do so).

Take advantage of people that are vulnerable, disabled, or have any other similar circumstances affecting them.


Not only do these laws apply to a debt collector’s behaviour towards you, but similarly your partner or spouse, family members, or anyone else related to you. If you end up in a position where a debt collecting is breaking these Laws, make a formal complaint to the Australian Competition and Consumer Commission (ACCC)1.


How And When Debt Collectors Can Contact You.


It’s likewise necessary to be aware of how and when debt collectors can contact you. They can do this by telephone, mail, emails, social networks or by visiting you in person. Any time you have correspondences with debt collectors, it’s integral that you keep a document of such interaction including the time and date of contact, the means of contact (phone, email, person), the debt collector’s name and company name, and what was said during the correspondence. It’s also important to note that debt collectors must respect your right to privacy and supplying your financial details to another party without your permission is breaking the Law.


The Australian Consumer Law also specifies that:


Debt collectors can only make up to 3 telephone calls or letters each week (or 10 each month).

Debt collectors can only phone you between 7:30 am and 9pm on weekdays and 9am to 9pm on weekends.

Debt collectors can only make face-to-face contact between 9am and 9pm on weekdays and weekends, once a month, and can only visit you if you haven’t answered any of their former attempts at communication.

There is to be no contact from debt collectors on national public holidays.

Debt collectors must be reasonably sure that if they contact you electronically (social media or email), that your account is not shared with another person and their communication can not be seen by anyone but you.


If you do agree to meet a debt collector in person, any threats of assault or violence should be reported to the police immediately1.


Know What Options You Have.


A debt collector’s job is not to be hospitable and give you a series of debt relief solutions. Their task is to encourage you to repay as much of your debt as possible, as fast as possible. So, the best thing to do is to recognise what your debt relief options are. You can perform some research on the web to see what options you have or you could seek professional debt management advice (most companies will offer free advice initially). Once you are aware of what options you have, you’ll be more self-confident in handling debt collector’s threats or demands, or any other collection tactics. If you don’t know what your options are, it makes the job of the debt collector much simpler by having the chance to control the discussion and informing you of what options you have, whether they’re true or not.


It’s always a tricky situation when you come into contact with debt collectors. Their job is very difficult, and they’ll use any methods possible for you to repay your debt since the amount of debt you repay and how quickly you repay it determines the commissions that debt collectors receive from lenders. The best way to manage correspondences with debt collectors is to recognise your legal rights, when and how they can contact you, record all communications, and knowing what debt relief choices you have. If you’re aware of these points, then it will substantially improve your interactions with debt collectors and hopefully won’t add extra stress to your current financial situation. If you need any advice about what debt relief opportunities you have, call the professionals at Bankruptcy Australia on 1300 795 575 or visit their website for more information: www.bankruptcy-australia.net.au.






Four Types Of People Who Have Money Problems

When it relates to money, a person’s personality represents a substantial role in their financial decision-making. Every person is unique, and that’s what makes us human, so it really shouldn’t come as a surprise that there are various personality types that are more likely to have money problems than others. It’s hard to change your personality traits, in particular when you’re older, so simply being aware of how your personality impacts your financial decisions may help you make better financial decisions in the future. It’s definitely an important topic to understand, as money challenges can compound quickly and you can find yourself in deep water within the blink of an eye. This article will investigate four different types of personalities whom are more likely to have money challenges, together with some suggested ways to improve your financial situation if you fall under one of these personality types.


The Risk-Takers


Fiscally speaking, the higher the risk the higher the reward, but the likelihood of experiencing high risk success is substantially low. Some folks are born as risk-takers, others develop this personality trait over time; but for the most parts, it’s the thrill of the risk that these types of folks relish. Statistically, the likelihood of financial success for the risk-takers are low, so it is crucial for these types of people to diversify their risks to increase their likelihood of financial success. These people can make high-risk investments, but they can’t put all their eggs in one basket. A blend of high-risk and low-risk investments will significantly improve their financial future.


  1. The Spenders


No matter if they’re wealthy or not, the spenders are the types of people who live life to the fullest without contemplating the financial effects of their decision-making. Whether they’re spending money to have a good time, look good, or to simply please others, the spenders are likely to accumulate massive amounts of debt which can take a long period of time to repay. Due to this fact, their opportunity of financial success are noticeably inhibited. Saving money is the key to financial success, so to prevent overspending, the spenders need to consider setting up a budget to keep track of their spending habits and at the same time, inspect the triggers that cause them to spend their money in the first place. Facing the triggers that cause these types of people to overspend is the key to solving the problem.


  1. The Ignorants


The ignorants are usually the type of folks that are financially uneducated and have no interest in improving their fiscal skills. The ignorants may have a similar reasoning to the risk-takers in that they want to ‘live life to the fullest’ and because of this, spend all of their money and end up in debt. It’s essential that folks with this personality trait learn the value of money and how it can be used to provide a better future. Instead of thinking about now, they should try to think about how spending their money now will have an effect on their future. Take an interest in learning how to budget by reading online blog posts and articles. Who knows, they might actually enjoy it?


  1. The Pessimists


In bleak contrast to the risk-takers, the pessimists tend to pass up on opportunities to make money purely because they’re afraid they won’t succeed. When it comes to large investments like purchasing a house or investing in the stock market, the pessimist will avoid taking any risks for fear of losing their hard-earned money. The concern with the pessimists is that by avoiding all risks, they will feel more protected, and this will restrict their opportunity of financial growth and success. A good solution for the pessimists is to diversify their investments in a wide-range of markets to ensure they have a well-balanced portfolio that is low-risk and offers an opportunity for a good return.


There are of course many other types of personalities than the ones discussed above, however these are probably the most common personality traits that impairs financial growth and can cause money troubles. In today’s world, money is without question incredibly important not only for survival, but also to be able to enjoy the only life we have. Just because you have specific personality traits doesn’t imply that you can’t reshape some of them with time to be more financially responsible. If you need any assistance with your finances, or you’ve ended up facing a mountain of debt as a result of overspending, speak with Bankruptcy Australia on 1300 795 575 for assistance, or visit www.bankruptcy-australia.net.au for more details.


What Is Debt Consolidation?


We’ve all seen the plethora of debt consolidation ads on television. There is plenty of competition in the debt consolidation market because sadly, lots of individuals are struggling financially and these businesses provide much needed financial relief. Home loans, car loans, credit cards; individuals can get loans from a wide range of lenders for practically anything nowadays. The challenge is that all these loans are difficult to manage and if you fall behind in your monthly repayments, you can end up in a lot of trouble.


The concept behind debt consolidation is that you can take all of your existing debts together and consolidate them into one, easy to manage loan that is simpler and gives you a much clearer understanding of your financial future. For many people, there are a range of advantages in consolidating your debts, and this article will examine debt consolidation thoroughly and the benefits they provide to give you a better understanding if debt consolidation is a good option for your financial situation.


The Basics


Debt consolidation allows you to repay all your current debts with a new loan that frequently has different (and in most cases more desirable) interest rates and terms. There are a couple of reasons why individuals use debt consolidation services.


High-Interest Rates

All loans have differing interest rates and terms and conditions, however, credit cards undoubtedly have the highest interest rates of all loans. Whilst credit card companies usually have a no interest period of around 1 or 2 months, the interest rates after this time can skyrocket up to 25% or higher. If you end up in a situation where you’re paying 25% interest on your credit card loans, it’s more than likely that your debt will cultivate much faster than you’re able to pay it off. Commonly, debt consolidation can provide lower interest rates and better terms, which can save you a considerable amount of money in the long-term.


Too much confusion with multiple loans.

When you have many debts with varying interest rates and minimum repayments that are due at different times, there’s no doubt that it can be problematic to manage and can become confusing at times. This increases the likelihood of missing a repayment which can give you a poor credit report. Debt consolidation considerably helps in this scenario by combining all of your debts into one which is notably easier to take care of and gives you a clearer picture of when you’ll be debt free.


High Monthly Repayments

When individuals are grappling with multiple debts, it’s challenging to manage your cash flow due to the high minimum repayments required for each debt. In addition to this, different debts have different repayment dates and this can cause people to struggle just to make ends meet. If you miss a repayment because you simply don’t have the money, your interest rates are likely to be increased, you can get a bad credit report, and your financial condition can go south very quickly. Debt consolidation loans provide one repayment each month, and you can negotiate your monthly repayment amounts depending upon the length of time you wish your loan to be.


Despite the benefits, if you’re interested in consolidating your debts, it’s paramount that you perform appropriate research to find the best debt consolidation interest rates and terms. You’ll uncover a large range of debt consolidation companies, some are good, some are bad, and some are downright predatory. First of all, you’ll need to choose a debt consolidation company that has lower interest rates and fees than all of your current debts. You’ll also need to review the terms cautiously. Some consolidation loans can be secured against your home or other assets, and you may be required to pay extra fees for example application fees, legal fees, stamp duty and valuation. The truth is, there is a lot of homework that needs to be done before you can determine if debt consolidation is the right option for you.


As you can clearly see, there are a lot of benefits associated with debt consolidation for people that are struggling financially. Lower interest rates and fees, lower monthly repayments, and less confusion with multiple debts can save you a huge amount of money in the long-run, and it’s probably better for your emotional wellbeing too. This article isn’t aimed to encourage you to consolidate your debts, as it all depends upon your financial situation. As a result of the complexity and the many variables to consider, it’s highly recommended that you seek professional advice so you can at least get an idea of what option is best for you if you’re experiencing financial problems. In some situations, declaring bankruptcy is a better alternative, so before you make any decisions about your financial future, phone Bankruptcy Australia on 1300 795 575 or visit their website for more details: www.bankruptcy-australia.net.au


What Happens After You Declare Bankruptcy

Bankruptcy is not a decision that should be taken lightly. There are some harsh financial consequences involved and your financial freedom will be restricted for years to come. This doesn’t imply that declaring bankruptcy is the end of the world though. It should really be thought of as the first step in securing a bright financial future for you and your family. Millions of people declare bankruptcy each year and most of them have the capacity to buy homes, cars and acquire credit cards after they’re discharged. In addition to this, understanding what life is like after you have declared bankruptcy will surely give you insight into making better financial decisions in the future.


Basically, once you have filed for bankruptcy, you surrender control of your finances and assets to a Trustee in exchange for protection against potential lawsuits that might be taken by your creditors. Once the legal process has been completed, you’ll be undischarged for a certain period of time (in most cases 3 years) after which time you’ll become discharged, which indicates that the financial restraints you sustained during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article strives to achieve is to give you an understanding of what happens after you declare bankruptcy and what options you’ll have after you become discharged.


You Can’t Leave The Country Without Permission


One of the limitations of declaring bankruptcy is that you cannot exit the country while you’re undischarged unless you seek permission from your Trustee. To do this, you’ll need to provide a lot of information relating to your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel abroad without prior approval from your bankruptcy Trustee, and in many cases will increase the duration of your undischarged bankruptcy to at least five years instead of three.


You Will Be Offered Credit Instantly


One thing that surprises plenty of discharged bankrupts is that they will immediately be offered credit by a wide range of lending institutions. The explanation behind this is that you won’t be able to file for bankruptcy again for a long period of time, so creditors understand that they have a good chance of getting their money back if you secure a loan. In some cases, obtaining a loan and making timely repayments will help improve your credit score, which will aid you in the recovery process. But be mindful, you don’t want to accept every offer thrown in your direction as some lending institutions are very dubious and include hidden fees and charges that can put you in debt again straight away. The key is to rebuild your credit record steadily.


Buying A Home Is Certainly Possible


There’s a common misconception that after you declare bankruptcy, you will no longer have the ability to secure credit for a mortgage. This is certainly not the case. Though bankruptcy will leave you with a poor credit score, you can still buy a home if you’re able to rebuild your credit within a couple of years, you pay all your bills in a timely manner, and you display a responsible use of credit. Of course, you won’t have the ability to get a home loan straight after you’re discharged, so it’s imperative to build your credit score sensibly before even contemplating securing a home loan.


Check Your Credit On A Regular Basis


Most financial experts advise that discharged bankrupts should review their credit report around twice a year. After initially declaring bankruptcy though, it’s imperative that you review your credit report each month for at least the first six months into your bankruptcy. A few creditors may still be requesting payments even though you are not required to make payments on any debts that were discharged in the bankruptcy process. So to prevent any further complications, it’s essential that you keep an eye on your credit report to make sure it’s accurate and up to date.


Whilst bankruptcy isn’t the ideal situation to be in, it doesn’t mean that your financial future is permanently constrained. There are some serious financial limitations imposed on people that file for bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re completely capable of securing a bright financial future. Acquiring a mortgage and other lines of credit will be possible a few years after discharge if the recovery process is well-planned and executed. Consequently, it’s vital that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is quite complicated and there are many factors to should be taken into consideration to ensure a smooth recovery process. If you’re thinking about filing for bankruptcy, speak to Bankruptcy Australia on 1300 795 575 or visit their website for more details: www.bankruptcy-australia.net.au


Is Bankruptcy My Best Option? How To Know If Bankruptcy Is Right For You

Going through financial hardship is a particularly stressful situation and unfortunately, millions of people throughout the world find themselves in this position every day. People in this scenario have various options to recover from their financial problems, and bankruptcy should be regarded as a last resort when all other options have been exhausted. You’ve probably seen several of those debt consolidating businesses advertise their services on TV for example. In most cases, it can be complicated to try to figure out the best way to recover from financial challenges, and many will resort to bankruptcy simply because it seems to be the simplest way of doing so. But how do you know if bankruptcy is the right option for you? This article will shed some light into bankruptcy to help you figure out if bankruptcy is the best option for your personal situation.


Bankruptcy has some fairly severe financial consequences: a bad credit rating, increased difficulty in securing loans, and higher interest rates are just a number of these. So needless to say, bankruptcy should never be taken lightly. There are lots of debt consolidating businesses that are happy to help, which is similar to bankruptcy as all your debts are combined into one. This is typically considered a sensible alternative to bankruptcy as the financial penalties aren’t as severe. But the best way to figure out if bankruptcy is the best solution for you is to ask for reliable advice from bankruptcy experts. In the meantime, however, here are some signs that your financial situation is in a serious condition and bankruptcy may be the best option for you.


No Savings


If you don’t have any savings in your bank and you’re confronting a mountain of debt, then bankruptcy may well be the best option for you. Even if you’re able to work a second job to increase your income, will this allow you to recover from your debts in the next 5 years? If no, then you should think about seeking professional advice about your scenario, as bankruptcy can be a viable alternative. Declaring bankruptcy will relieve you of these debts and even though there are financial consequences, it’s probably the best way to recover in this situation.


Making Minimum Repayments Only


If you can only afford to make the minimum repayments on your debts, then the interest on these debts will compound quickly and you should really consider bankruptcy before your condition decays further. With no supplementary income, it can sometimes take up to 30 years to pay off your debts by making minimum repayments only, so all the interest you’ll be paying over these years can truly amount to significant sums of money. While you’ll still be repaying debts with interest after filing for bankruptcy, typically you can arrange better terms on conditions on your debts after filing for bankruptcy.


Debt Collectors Are Calling You


When you’re being frequently hassled by debt collectors on the phone and in the mail, it’s a sign that your financial position is worsening and you will need to make some changes. When you’re being contacted by debt collectors, it means that your creditors have sold your debts at heavily discounted prices to debt collectors because they strongly believe that you aren’t in a situation to repay these debts in an acceptable period of time. This is a clear indication that you should seriously think about declaring bankruptcy as it’s probably the best solution for both your finances and your emotional well-being.


While there are some serious financial implications, bankruptcy isn’t the end of the world and in many cases, it’s the first step to financial freedom. When you’re dealing with a mountain of debt and you can’t see any way of recovering in the near future, it’s time to seek professional advice to find out what options you have. While there are many alternatives available to help you in financial hardship, if you’re experiencing any of these warning signs then chances are that bankruptcy is the best alternative to ensure you and your family can secure a bright future. In any case, if you’re facing financial difficulties, it’s best to get in touch with bankruptcy professionals sooner rather than later. For a confidential discussion about your financial circumstances, contact Bankruptcy Australia on 1300 795 575 or visit www.bankruptcy-australia.net.au


Ways to Save Money On Your Groceries

Providing food for your family is necessary and the costs of doing this can vary largely depending upon your mood, financial situation, and whether you’re hungry when you go to the supermarket! But the reality is that food is a sizable expense for a large number of families, and seeking out ways to save at the grocery store can amount to a great deal of money in time. You might even be able to take the family on a vacation with all the cash you can save on food over the year if you spend your money intelligently. We all wish we could save more money on groceries, so here’s a brief guide on some valuable tips on how to do exactly that.


Plan Your Meals


It’s typical for people to go to the grocery store with a list of items they need, but seldom do they plan every meal of the week and all the ingredients that are needed. Organising your meals and ingredients ahead of time will make it easy for you to spend your money only on what is needed. In doing this, you’ll also should know what you currently have at home, so it’s a smart idea to make use of the items you already have in preparing your meals for the week. There are also some meals that are considerably more affordable than others, so if you really wish to save money, pick meals that are low cost but fulfilling. You can discover loads of cheap meal menus on the internet. It’s also a smart idea to have a paper and pen in the kitchen so whenever you run out of a particular ingredient, jot it down right away so you remember the next time you’re at the supermarket.


Don’t Go To The Grocery store When You’re Hungry!


It’s important that you always eat some food before heading to the supermarket for your weekly shopping. If you’ve ever been to the supermarket when you’re hungry, you’ll know what I mean! In my experience, I start salivating when I find foods that I like but don’t really need and because of this, they wind up in my shopping basket. Even if you’ve planned your meals for the week and have a list with you, often the temptations are overpowering and can cause you to spend extra money on unnecessary items.


Use Loyalty Cards


An excellent way to save money on groceries is to use loyalty cards at the check out. Typically, you’ll get a discount on various items that aren’t displayed and you’ll also receive points which could be used either by buying a gift card or various other featured items. Regardless, you’ll be saving money that would otherwise be going down the drain!


Compare Prices


There are many substitutes for the same type of food so it’s vital that you spend some time examining the prices to make sure that you get the best value for money. You don’t always need to buy the ‘no frills’ brands, but grocery stores will commonly have sales on many items so it’s useful to do your research. Alongside this, when there’s a sale on a particular item, it’s always a fantastic idea to stock up when the prices are at their lowest. You’ll also want to examine the prices of your most often used foods at different grocery stores to figure out which items are less costly. It might be the case where you travel to two grocery stores when embarking on your weekly shopping expedition, but the price savings are well worth it.


Shop At The End Of The Day


I know it sounds hard particularly after a long day at work, but shopping in the evening is the best time to find discounts. Perishable goods namely fruits and vegetables and bakery items are usually discounted if there is too much inventory for the next day. The best part is that these items are almost as good as new except cheaper! You’ll be surprised with the number of discounts you’ll find at the grocery store if you go shopping in the evening.


So there you have it folks! There’s lots of ways to save money on groceries and the above tips are really just scratching the surface. If you manage to save $20 a week on groceries, which is very realistic, you’ll be saving over $1,000 in the year! Alternatively, if you’ve tried all of the above tips and are still struggling to find enough money, it may be best to seek professional advice regarding your financial scenario. If this is the case, talk to Bankruptcy Australia on 1300 795 575 or visit their website for more information: www.bankruptcy-australia.net.au


Signs You Could Be Having Money Issues

Everybody loves money, particularly spending it! Getting new toys or new clothes which make you feel and look great is important for your confidence and self-esteem. Yet how do you know if you’re good with money or not? Even if you get paid plenty of money doesn’t imply you’re good with it. There are plenty of successful people who have huge problems with money just because they weren’t familiar with the warning signs. Today, it’s important to be money conscious so here are 5 signs that you could have issues with money which can gradually trigger serious financial issues in the future.


You don’t have any savings


Many of us get complacent with our lifestyles – our car, our home, our profession – and forget that things can certainly go wrong and everybody needs some financial protection for rainy days. Without any savings in the bank, what will protect you from incidents like hospitalisation, job loss or car accidents? If you’re living paycheque to paycheque, all it takes is one financial blow and you’ll be in a world of pain. You’ll have to take out a short-term, high interest loan which will only magnify the issue – you can’t save any cash presently so how will you repay an extra expense? Though it’s easy to neglect, having no savings is a recipe for disaster and you should act now before it’s too late. The majority of financial advisors suggest having three to six months of living expenses in an emergency fund.


You have no idea where your money goes


Being good with money means that you know when and how much money comes in, and where it goes when you spend it. If you have no idea where your money is being spent, it signals a lack of care and respect for your hard-earned cash, and can clearly bring about financial problems in the future. Try creating a budget and actively abiding by it. This will help you in having a better awareness of your finances so you can understand how much of your money is being squandered on unnecessary items. After a month or so, reward yourself for sticking to your budget and you’ll value spending money on yourself a lot more.


Making minimum repayments only


If you can only afford to make the minimum repayments on your loans, especially credit cards, then you’re heading for financial problems. It can take many years, even decades, to erase a credit card debt by only making minimum repayments. In the meantime, interest charges will be eating away all your prospective savings while you’re virtually just treading water. If this sounds familiar, it’s time to make a change and quickly. You ought to get your priorities straight by making a plan, sticking to a budget, and saving as much money as possible to repay your outstanding debts.


Spending more than you earn


The most evident sign of money issues is where your spending eclipses your earnings. Regardless of whether you have a substantial savings account, you should always ensure that your income is more than your expenses, it’s just basic maths really. If you find yourself in a bad habit of spending too much, it can come to be addictive and bring about even more issues, on top of probable financial difficulties. Many people try to disguise this problem by paying bills with their credit cards which basically makes the issue worse in the long-term. Do you even know if your earnings is higher than your spending? If you’re unsure, it’s definitely a good time to find out and make some adjustments.


You have new clothes in your wardrobe that you don’t wear


A practical way to evaluate if you have money issues is to look in your wardrobe. Do you have clothes that still have the tag on them? Almost everyone loves a sale, and it’s an excellent way to save money when cash is tight and you’re in need of something. But purchasing clothes just because they’re on sale may illustrate that you have money troubles. If this is the case, you may similarly be inclined to purchase other items purely because they’re on sale too. Buying unnecessary items under the impression that you’re saving money is something that needs to be amended.


Despite how much you get paid, if you’re not good with money then now is the time to modify your habits to steer clear of possible complications in the future. If any of these warning signs sound familiar to you, it may reveal that you have problems with money and should seek advice before it’s too late. All it takes is one financial hit and you’ll be sucked into the financial abyss. To find out what options you have, or to talk with someone about your finances, reach out to Bankruptcy Australia on 1300 795 575 or visit http://www.bankruptcy-australia.net.au


Effective ways to Recover After Declaring Bankruptcy

There’s no doubt that are some heavy financial repercussions in declaring bankruptcy, and there’s no question that your life will go through some considerable changes. If you’re in this predicament, don’t be alarmed. The tough economic times witnessed today means that more and more individuals are filing for bankruptcy. In reality, there are close to 20,000 Australians each year that file for bankruptcy. So rest assured, you’re not alone.


Instead of dwelling on the past, it’s important that you look towards the future and attempt to recover as best as possible. Bankruptcy doesn’t mean the end of the world, it just means that some modifications have to be made to secure a bright future for you and your family. So here are a couple of simple strategies that you can use to best recover after filing for bankruptcy.


Psychological recovery


It’s common for people who file for bankruptcy to feel feelings of failure, self-loathing and remorse. While it may seem natural have these feelings, being bankrupt is the result of just another mistake that all of us make as humans. You have to stop punishing yourself and look towards the future. Bankruptcy is the initial step towards financial freedom, and recovering from a bad credit rating is easier than you think. The longer you give in to these negative feelings, the longer it will take to recover. Dealing with your financial problems is the first step in overcoming them, so you’re already in a better position than you were before declaring bankruptcy.




It’s important that you evaluate the reasons why you became bankrupt to make sure that you don’t make the same mistakes again. Declaring bankruptcy offers you a second chance to get your finances in shape, so it’s best you make the most of it. Whilst there’s possibly a number of reasons why you declared bankruptcy, most of them probably pertain to bad spending and borrowing habits. So it’s a smart idea to make a list of two or three things that led you to filing for bankruptcy and devote yourself to not making these mistakes again.


Make a budget


Once you’ve recuperated emotionally from bankruptcy, the next step is to make a rational and conceivable budget. You’ll have to consider your income and expenses thoroughly, and formulate a way to save money while still paying all of your living expenses. Even if it means that you downsize your house or sacrifice some luxury items, becoming financially healthy is your primary priority. There are some easy ways to save money, for example eating at home as an alternative to eating in restaurants and cancelling your gym membership in favour of walking to work. Always remember to include in your budget an amount for unforeseen expenses.


Pay your bills on time


The 1st step in mending your bad credit rating is to make sure you pay all your bills on time. Even though this won’t increase your credit rating immediately, it will ensure that your credit rating doesn’t go down any further. You might choose to set up automatic bill payments with your bank to guarantee that you don’t miss any payments. This will demonstrate to lenders that you’re financially responsible, and the longer you do this, the better your credit rating will get. This is considered as the single, most effective action you can take to restore your credit rating.


Increase your income


If you haven’t presently got consistent employment, now is the time to do so. Regular income over time will not only strengthen your credit rating but it will enable you to increase your liquid assets, providing you with more choices. If you’re in a position where you can obtain a weekend job, you should sincerely consider it. Or take a look at your hobbies and attempt to create a way to increase your income by doing something that you enjoy. Cash is king when you’re bankrupt so anyway to increase your earnings is a wonderful idea.


While declaring bankruptcy is never an easy decision, it is the very first step in dealing with your financial difficulties and learning from the past so you can enjoy financial freedom in the future. It’s important that you assess the reasons that caused your financial hardships to ensure they don’t happen again. Secure employment and paying your bills on time will improve your credit rating progressively, and adhering to a budget is paramount. If you’re considering filing for bankruptcy and need some advice on your options, get in touch with Bankruptcy Australia today on 1300 795 575 or visit www.bankruptcy-australia.net.au


Bankruptcy & Superannuation 3 Critical Questions

For most Australians superannuation can be an individual’s biggest asset, the notion of losing it when declaring bankruptcy is a very genuine concern for most of our clients. With certain areas of the economy doing pretty well and other parts enduring tough economic times, bankruptcy numbers in Australia still continue to increase. Economists don’t speak about Australia’s two-speed economy much anymore, but it certainly still is two-speed. Thanks to a long-term boom in the Sydney and Melbourne housing markets, these major centres are doing quite well running at a nice speed, with no sign of stopping anytime soon. Having said that mining areas in North Queensland and Western Australia have nearly stopped dead and in some areas firmly stuck in reverse.


The Past: Superannuation and bankruptcy. Not too long ago, the Bankruptcy Act 1966 instructed that all property (including superannuation) that belonged to a bankrupt at the beginning of their bankruptcy was to be given to their creditors. This brought up the question: was there an interest in a superannuation fund property? The law expressly answered this question with a dubitable no – the interest of a bankrupt in a regulated superannuation fund was not property divisible among creditors. Nevertheless, this protection of superannuation was not set in stone. In 2007 the laws changed, at that time the excess of a bankruptcy’s interest in a superannuation fund that exceeded the pension ‘reasonable benefit limit’ or (RBL) did constitute property that was divisible among creditors.


Post 2007 we have ‘Simpler Super’. The simpler super changes indicated a considerable change for superannuation and bankruptcy. The main change was, put simply, your superannuation is safe over and above the pension RBL amount. This indicates that protection of superannuation upon bankruptcy is now absolute, technically, a bankrupt can now have a massive amount of super and it will be safe. The government officially illustrated the changes through its explanatory memorandum, Superannuation Legislation Amendment (Simplification) Bill 2007, as follows:


Currently, under the Bankruptcy Act 1966, a bankrupt’s interest in a superannuation fund up to the bankrupt’s pension RBL is protected from being divisible among creditors. A bankrupt’s superannuation interest in excess of the pension RBL automatically vests in the bankruptcy trustee. The amendments remove references to RBLs from the Bankruptcy Act 1966 to ensure consistency with the new Simplified Superannuation rules, which abolish RBLs with effect from 1 July 2007. This means that, from 1 July 2007, a bankrupt’s entire interest in a superannuation fund is protected, if you know what you are doing.


Frequently Asked Questions


Question: Does this indicate that I can intentionally contribute excess funds to my superannuation before I declare bankruptcy and it will be safe?


Answer: No. Although these changes protect your superannuation, 100% voluntary contributions above your employers required 9.5% will be viewed as an asset and obtainable to creditors due to the fact that it will be considered as a preference payment. In other words, if you sell your house and make $50,000 profit from doing this, then shovel it off into your super fund, the trustee will view that as a preference payment, or in plain English you paid your super fund $50,000 in preference to your creditors, so the trustee will claw back that excess from the fund, and allocate it towards your debts.


Question: What about my Self-Managed Super Fund (SMSF), is it also safe?


Answer: Yes. But there are things you will need to do once you are bankrupt; In the case of a self-managed super fund and bankruptcy, bear in mind that the Superannuation Industry Supervision Act 1993 rules that a “disqualified person” must not be a trustee of a superannuation entity. In short, if you are bankrupt you can no longer be a trustee of any trust including a super fund. A disqualified person includes a person who is an insolvent under administration, like an undischarged bankrupt.


Ideally this means if you have a SMSF, you need to retire or resign as the trustee, or director of the corporate trustee, prior to becoming bankrupt or within 6 months after declaring bankruptcy. Failure to do so can result in imprisonment for a maximum of two years. Shortly after the person resigns/retires, the SMSF will most likely fail to meet the basic conditions necessary to be an SMSF and will require a restructure.


Restructuring can include transferring the bankrupt’s superannuation interests to a regulated superannuation fund and then terminating the SMSF. Or you can elect a registrable superannuation entity (RSE) licensee to act as trustee of the SMSF, at which point the fund would cease being an SMSF and would transform into another form of superannuation fund. Even though RSE licensees can be expensive, this is advantageous where the fund has ‘lumpy’ non-liquid assets (like property) that can not promptly be rolled into another superannuation fund. More often than not, an individual who holds an enduring power of attorney in respect of a member can act as trustee of the SMSF instead of the member.


Question: I’m old enough to draw down my super, are all my payments to myself safe no matter how much?


Answer: Beware here, this could genuinely cost you! As per the discussion above, an interest in a superannuation fund is totally protected upon bankruptcy. The same applies to any lump sum gained from a superannuation fund as mentioned by the Bankruptcy Act. So as an example, you as a bankrupt who acquires a lump sum of $10 million from your superannuation fund could keep that money and it will be safe. However be warned the same is not true of pension payments received from superannuation funds. They are not protected in the same way. Pension payments are regarded as income and income only receives minimal protection from creditors. The particular level of protection afforded to pension payments is adjusted for inflation twice a year, but as at 22 February 2017, the level is as follows:


Dependants Income Limit


0 $54,736.50.

1 $64,589.07.

2 $69,515.36.

3 $72,252.18.

4 $73,346.91.

over 4 $74,441.00.


Regardless of what you earn over these amounts annually, 50% of the excess is payable to the trustee just like any income earned during bankruptcy and paid to creditors.


The difference in the treatment between lump sums and pensions has considerable practical implications now that account-based pensions have been introduced; don’t presume it’s all safe and no matter what you do, get the right advice. At this point we recommend you to give us a ring and we will point you in the right direction. Put simply, your super must be handled with care. Every case has a distinct set of circumstances and between our firm and your financial advisor, we will secure the right outcome for you. If you need to know more, call Bankruptcy Australia on 1300 795 575.