How do I know if Bankruptcy is right for me?
If you are facing serious financial issues, it is important to seek professional advice before embarking on a course of action. To determine whether bankruptcy is the right solution, our experts will meet with you to assess your situation and discuss the most suitable solutions for addressing your financial problems.
Common warning signs that individuals are experiencing financial difficulties that may result in bankruptcy include:
- Denial, believing the situation will go away
- Increased tension with your spouse or partners, arguing over money issues
- Receiving letters of demand, late payment notices, writs and/or bankruptcy notices from creditors, debt collectors or solicitors
- Unable to pay creditors such as banks; unable to pay credit cards, invoices or bills on time or at all
- Borrowing money from family and friends due to lack of savings (or spending all your savings)
- Applying for more finance or credit, or often being denied for credit applications
What is Bankruptcy?
Bankruptcy is a legal process that provides protection to people who are unable to repay their debts or reach a suitable arrangement with their creditors. Although it is important to know your options and the consequences of bankruptcy before taking action, bankruptcy may be the most suitable solution. Bankruptcy allows individuals to be released from most debts, providing relief and helping you to make a fresh start.
Bankruptcy takes two forms. In the event that you are no longer able to pay your debts, you can declare Voluntary Bankruptcy (also known as a Debtor’s Petition). Alternatively, if you owe a creditor more than $10,000, they may apply to the court to make you bankrupt (also known as a Creditor’s Petition).
Once the act of bankruptcy has occurred, individuals are subject to various obligations and restrictions on their income, employment and business activities.
Learn more about Bankruptcy on the AFSA website, or see a list of AFSA guides in our resource centre.
What causes Bankruptcy?
In most cases, bankruptcy occurs when an individual is unable to pay all their debts. This may result in them receiving letters of demand, writs and/or bankruptcy notices from creditors, debt collectors or solicitors. Failing to act on these notices may cause creditors to bring bankruptcy proceedings against the debtor. Similarly, bankruptcy proceedings may be brought where an individual’s personal guarantees against company debts are called up.
Creditors may apply to the court to make an individual bankrupt if they can prove the individual has at least $10,000 in debt and that a bankruptcy notice has expired. Bankruptcy may also occur where a creditor is experiencing non-payment of a debt, dishonoured payments or where extended payment terms are not met by the individual. This is also true where a creditor has sufficient reason to believe that the debtor is disposing of, or transferring property, prior to their bankruptcy.
Property that is transferred with the intention of defeating creditors may still be recovered as part of bankruptcy proceedings. Read our guide to Bankruptcy Voidable Transactions here.
An individual may also enter into voluntary bankruptcy if they are:
What are the expected outcomes of Bankruptcy?
During a bankruptcy, a third party (such as SV Partners) will be appointed as Registered Trustee to manage the bankruptcy process. The Trustee will assess, recover and sell your assets for the benefit of creditors. Trustees are also charged with performing a comprehensive investigation into your financial affairs and with recovering Voidable Transactions. Proceeds from the sale of your assets will be distributed among creditors according to predetermined priorities.
Through the bankruptcy process, existing debts are extinguished, providing relief from debt for individuals. Bankruptcy also provides relief from creditor demands and allows individuals to start their life afresh, free from most debts.
How can SV Partners help?
If you are in a situation where you may be facing bankruptcy, SV Partners can help you. Our professional team can assess your situation and provide solutions to manage your financial difficulties.
Our role is to provide objective and practical solutions that are tailored to your situation, ultimately offering relief from debt and financial pressures.
We are experts in all facets of bankruptcy, voluntary administration and creditors' voluntary administation. Our approachable team make every effort to make the bankruptcy process as transparent and manageable as possible. Visit our FAQ section for more information. For an obligation free consultation with a bankruptcy expert, contact us today, or reach us on our confidential assist line on 1800 246 801.