If you are seeking relief from debts which you cannot pay, then you may consider filing for bankruptcy.

The effect of bankruptcy is that all of your provable unsecured debts up to the date you go bankrupt are extinguished, meaning you no longer have to pay them.

There are certain debts which are not extinguished by bankruptcy, including (but not limited to) court imposed penalties and fines, HECS/HELP debts and child support payments. If you are concerned about whether one of your debts would be extinguished by bankruptcy, please get in touch and we can assist you.

Consequences of Bankruptcy

There are various consequences which you should be aware of and prepared to accept in bankruptcy. Some of these consequences include:

• Certain assets, such as real estate, motor vehicles and shares, may vest in your Bankruptcy Trustee and be sold for the benefit of your bankrupt estate. However, you would be able to keep your furniture and personal items and also your motor vehicles and tools up to certain indexed values. For further information regarding the indexed values, please see here.
• Property you acquire during the 3 year period of bankruptcy may also vest in your Bankruptcy Trustee and be sold for the benefit of your bankrupt estate. For example, if you become entitled to receive an inheritance during the period of your bankruptcy, that inheritance would need to be paid to the Bankruptcy Trustee.
• Your income would be assessed for each year of bankruptcy by the Bankruptcy Trustee.
  If you earn over a certain threshold each year, you may be required to pay income contributions to your bankrupt estate. The threshold is based on the number of dependants you have. We have a calculator on our website which can assist you estimate any liability.
• There are restrictions with respect to operating a business and incurring credit.
• You would be required to obtain your Bankruptcy Trustee’s consent before travelling overseas travel. Often the Bankruptcy Trustee will request that your passport be held in their office during your bankruptcy and returned to you temporarily for any approved travel.
• You cannot be a director of a company while bankrupt.
• The bankruptcy would be recorded on your credit rating for 2 years after your discharge from bankruptcy (generally 5 years in total).

Further Information Regarding Bankruptcy

If you wish to discuss this article, or your circumstances, please don’t hesitate to contact Pearce & Heers Brisbane or Gold Coast office and our experienced staff will be able to assist you.