The majority of Australian’s have only seriously contemplated bankruptcy when playing a game of Monopoly with their mates! Despite this, there are approximately 13,000 individuals that file for bankruptcy each year in Australia. It’s astounding how rapidly individuals can go from being in a healthy financial position to facing a mountain of debt. Commonly, situations such as loss of employment, divorce, or unforeseen medical expenditures will result in serious financial complications within just a few months. Instead of wrestling with these debts for several years and ignoring the elephant in the room, it’s far better to cut your losses and seek financial guidance immediately.
A few months ago, the Australian Government proposed changes to bankruptcy laws that reduce the bankruptcy period from three years to 1 year. If this proposal is passed, it will have a dramatic impact on the stigma related to bankruptcy and the financial repercussions that bankrupts will experience down the road. While lots of people understand the concept of bankruptcy, lots of people wouldn’t know where to start if they decided that declaring bankruptcy is the best alternative for them. To provide some insight, here are the top 5 tips on how to declare bankruptcy in Australia.
- Seek guidance from a registered bankruptcy trustee
If you’ve decided that bankruptcy is the best solution for you, always consult with a registered bankruptcy trustee before making any concrete decisions. There is a vast difference between a firm that charges you to declare bankruptcy and a legally registered bankruptcy trustee firm. Most of the time, bankruptcy firms are not the same as registered bankruptcy trustee firms, so be sure you get the right advice the first time so you can make the best financial decision. The right advice will not only aid you with your decision-making, but also put you in the best position to make a healthy recovery after you have been discharged.
- Download the forms needed to declare bankruptcy
If you’ve decided that bankruptcy is the best solution for your individual situation, there are two sets of documents that you will need to complete for you to declare bankruptcy:
- The Debtor’s Petition, which is a 3 page document (click here to download: https://www.afsa.gov.au/insolvency/how-we-can-help/forms-list/debtors-petition).
- The Statement of Affairs, which is a 25 page document (visit this site to download: https://www.afsa.gov.au/insolvency/how-we-can-help/forms-list/statement-affairs).
- Collect your supporting documents.
In almost all bankruptcy cases, individuals must offer evidence that their claims are accurate by supplying various supporting documents. Generally, this will include the following:
- Income statements and personal tax returns
- Company tax returns (if you are a business owner)
- Centrelink benefits statement (if relevant)
- Formal child support notices
- Any family law orders
- Any court orders
- Wills of any deceased estate of which you are the beneficiary
- All transaction statements from transferred assets over the last 5 years
It is essential to note that failure to supply accurate information or any effort to conceal information that would otherwise be relevant to your bankruptcy proceedings is a serious offence that is punishable in a criminal court.
- Complete the bankruptcy paperwork.
You must reply to every question in your bankruptcy paperwork accurately and truthfully to make sure it gets processed correctly. It is vital that you include the address information of all your lenders in the secured and unsecured sections of the bankruptcy paperwork. In the Debtor’s Petition, you’ll need to provide at the very least two types of ID. If you’re unclear of which forms of ID are acceptable, check the AFSA website (https://www.afsa.gov.au). If you run out of space when answering any questions, simply print out another copy of the same page and use it to fill out further information. Additionally, be careful to include all assets sold in the last 5 years in question 33.
- Submit your bankruptcy paperwork.
Before you submit your bankruptcy paperwork, check the date to ensure you are lodging it within 28 days of you signing it. At Bankruptcy Australia, we understand that all the paperwork can be a bit over-bearing, so if you have any inquiries regarding your any of your answers, it’s best to call us on 1300 795 575 to ensure you get it right the first time. Alternatively, visit our website for additional information: www.bankruptcy-australia.net.au.