Bankruptcy in Australia - Choices, Choice, Choices

When it comes to Bankruptcy Australia, there are a lot of choices that we get given depending upon who we are, who we speak to, and what exactly has gone wrong. One of the most common confusion I see with Bankruptcy is when it comes to choosing between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.

Should I consolidate my debts?

When it comes to Bankruptcy in Australia, a lot of the info you receive on this issue will reflect the interests of the advice giver. Therefore, if you call a debt consolidation provider, I can promise you they will tell you to consolidate your debts. The debt consolidation business is a multi-billion dollar industry making money in one very simple way: charging you a fee for helping you wrap each of your credit card and personal loans into a single neat and tidy package.

I hate to tell you this but these guys won't be doing it free of charge. Please do not misunderstand me: if you believe your financial troubles in Australia may be fixed by paying less interest, then go on and investigate the possibilities. Even a little amount of interest saved over years easily adds up.

Normally I find if you read this blog you've undoubtedly attempted to consolidate your debts already and come to the following realisations like these:

• Your credit rating is not good, and your credit file already has defaults on it so not a single person will give you a loan, consolidated or otherwise,.
• By the time you work it all out, you're so far down a hole that saving on a bit of interest just won't make a great deal of difference,.
• You've probably gotten to the stage where you've had more than enough, you're emotionally burnt out, you can't go on one more day ignoring blocked calls on your phone, ignoring the demands in the mail and so on.

Personal Insolvency Agreements

So when it relates to Bankruptcy in Australia, what's the huge difference between a Debt Agreement and a Personal Insolvency Agreement?

Freedom is the main thing Personal Insolvency Agreements (PIA) have in their favour. They're also administered by a registered and - may I add - regulated trustee featuring the government trustee ITSA, and not a private agency that advertises on TV. Basically this process resembles Debt Agreements (DA): The trustee holds a meeting with the people you owe money to and these experts mediate a deal on your behalf. You can give a lump sum settlement figure or enter into a payment plan, or you can offer them assets instead of cash. This might sound fine when it comes to the troubles with Bankruptcy - that is until you discover that one of the obstacles with PIA's is that 75 % of the people you owe money to need to agree on the deal. If they do not, your proposal is rejected or will need to be renegotiated.

Generally people you owe money prefer all their money back in addition to interest. Sometimes they'll go for less than the amount you owe them - it's typically a percentage of the debt - but allow me to stress this aspect: because of all the variables involved in the negotiation process to put together a PIA its difficult to put a figure on what the people you owe money to will actually settle for.

In most cases you'll have to pay back 100 % of the debt owed. This is not just because your creditors are greedy or have a mean streak, it's because the administrators take 20 % of whatever is decideded upon with the people you owe money to. That applies whether you use a private company for this process or ITSA, the government body setup to administer to these PIAs.

When it comes to Bankruptcy and insolvency I've heard of creditors choosing less 80 % on rare occasions, but that usually only occurs with a public company entering into receivership owing huge sums of money (the kind that makes the news). If you are were owed $10million and you know the people who owe you the money have a team of smart lawyers and some very clever structures in place and they offer 5 % of the debt, you might take it and be grateful. Sadly, ordinary punters like you and me in Australia aren't going to get that lucky!

If you would like to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to call Bankruptcy Advice Australia on 1300 879 867, or visit our website: bankruptcy-advice.com.au.

Bankruptcy in Australia - Will I lose my business if I go bankrupt?

When people in Australia come to me hoping to speak about Bankruptcy, they are typically full of questions. The internet has lots of information, but far too much of it is baffling or contradicts itself, so I make it my mission to try and make it clearer. One of the very most usual problems is 'Will I lose my business if I declare bankruptcy?' The quick answer is no. If you are an owner of a company any shape or size you can keep your business if you want to. In Australia, businesses that become insolvent have a few options for instance, liquidation, voluntary administration and so on. It's individuals who go bankrupt not companies.

Bankruptcy is a complex area so get some expert advice on this one if you have a business. Generally speaking, the financial debts in a business and personal debts go hand in hand when a business owner declares bankruptcy. There are a few essential implications for directors of companies when it pertains to Bankruptcy in Australia: A bankrupt can not be a director of a company, so if you have a pty ltd company you are going to need to resign as a director soon after you're bankrupt.

A limitation that applies when you are bankrupt as a business owner is that you can be in your own business as a sole trader only. Generally there are things you have to reveal as an aspect of that but generally you can still run your company. For some business owners, bankruptcy affects their ability to run the business because of the licensing issues. As an example, if you run a building company, your license will be suspended once you're bankrupt and therefore you can no longer trade without that license, so make sure you are asking the ideal questions when it involves licenses and Bankruptcy in Australia.

However if your business is not impacted directly by such issues, then you'll will need to restructure the way you run your business. There are considerations when and if you go bankrupt as a business owner: you can not acquire heaps of debt in your company, then go bankrupt and afterwards open the doors the next day like nothing at all had happened. There are laws in place to avoid what is called phoenix companies popping up out of the ashes of an old company.

Having said that, it's just a point of speaking with the suitable people about Bankruptcy. In this circumstance you may believe you need a liquidator for your company, and you could be right, but keep that in mind every liquidator is unique and have their own motives. Liquidators profit from your liquidation - heaps of money - so what advice do you think you will get?

When it comes to Bankruptcy, I think that giving generic advice in this area is likely unsafe as it can have very considerable implications for directors and business owners. This is because it is one of those cases where what the right advice for one business owner is the inappropriate advice for the other. There are some fundamentals however, that you may benefit from. There is no limit to the size of the business you run when you are bankrupt. You can employ staff. You can constantly deal with your manufacturers under certain conditions, the main one being you will need to meet the payment terms agreed upon.

So when it concerns Bankruptcy, don't get overly worried about what you can and can't do as a business owner, just get the appropriate advice ... If you want to learn more about what to do, exactly where to turn and what questions to ask about Bankruptcy, then feel free to consult Bankruptcy Advice Australia on 1300 879 867, or visit our website: www.bankruptcy-advice.com.au/