Many Australian’s have only really considered bankruptcy when playing a game of Monopoly with their friends! Despite this, there are somewhere around 13,000 people that file for bankruptcy every year in Australia. It’s astounding how quickly individuals can go from being in a balanced financial position to tackling a mountain of debt. Most of the time, unfortunate events such as loss of income, divorce, or unforeseen medical costs will generate serious financial complications within just a couple of months. Instead of wrestling with these debts for several years and ignoring the elephant in the room, it’s much better to cut your losses and seek financial guidance as quickly as possible.
Recently, the Australian Government proposed changes to bankruptcy laws that decrease the bankruptcy duration from 3 years to 1 year. If this proposed act is passed, it will have a remarkable effect on the stigma linked with bankruptcy and the financial consequences that bankrupts will face down the road. While lots of people understand the idea of bankruptcy, many people wouldn’t know where to start if they decided that declaring bankruptcy is the best alternative for them. To offer some insight, here are the top 5 tips on how to declare bankruptcy in Australia.
- Get advice from a registered bankruptcy trustee
If you’ve made up your mind that bankruptcy is the best approach for you, always seek guidance from a registered bankruptcy trustee prior to making any concrete decisions. There is a huge difference between a firm that charges you to file for bankruptcy and a legally registered bankruptcy trustee firm. In most cases, 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 assist you with your decision-making, but also put you in the best position to make a complete recovery after you have been discharged.
- Download the forms required to declare bankruptcy
If you’ve made the decision that bankruptcy is the best option for your individual scenario, there are two sets of documents that you will need to complete in order to file for 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 (click here to download: https://www.afsa.gov.au/insolvency/how-we-can-help/forms-list/statement-affairs).
- Collect your supporting documents.
In nearly all bankruptcy cases, individuals must present evidence that their claims are accurate by supplying a variety of supporting documents. Usually, this will include the following:
- Income statements and personal tax returns
- Company tax returns (if you are a business owner)
- Centrelink benefits statement (if applicable)
- 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 paramount to note that failing to deliver accurate information or any effort to hide information that would otherwise relate to your bankruptcy case is a serious offence that is punishable in a criminal court.
- Complete the bankruptcy paperwork.
You must respond to each question in your bankruptcy paperwork accurately and truthfully to ensure it gets processed properly. It is crucial that you include the address information of all your creditors in the secured and unsecured sections of the bankruptcy paperwork. In the Debtor’s Petition, you’ll need to present a minimum of two types of ID. If you’re uncertain of which forms of ID are accepted, check the AFSA website (https://www.afsa.gov.au). If you run out of space when addressing any questions, simply print out another copy of the same page and use it to fill out extra details. In addition, be careful to include all assets sold in the last 5 years in question 33.
- Lodge your bankruptcy paperwork.
Before you lodge your bankruptcy paperwork, inspect the date to ensure you are lodging it within 28 days of you signing it. At Bankruptcy Experts Joondalup, we understand that all the paperwork can be a bit overpowering, so if you have any inquiries regarding your any of your answers, it’s best to give us a ring on 1300 795 575 to ensure you get it right the first time. Alternatively, visit our website for further information: www.bankruptcyexpertsjoondalup.com.au.