What is Bankruptcy in Queensland? 

Have you ever wondered what bankruptcy is and how it operates in Queensland?

Bankruptcy is a legal action where an individual is relieved of some/all of their debts due to their inability to pay them.

Bankruptcy is a serious legal process and carries significant consequences once declared. Legal advice is therefore highly recommended if you find yourself unable to pay debts!

Bankruptcy in Queensland is governed by the Bankruptcy Act 1966.

In most cases, bankruptcy lasts for 3 years and 1 day from when it becomes official.

Be referred to the best insolvency lawyers on the Sunshine Coast for bankruptcy matters

Consequences of Bankruptcy

Bankruptcy, while sometimes necessary, can incur serious consequences. Those considering it should take into account:

1. Your name will permanently remain on the National Personal Insolvency Index (NPII): The NPII is an online index accessible by any individual (including banks and landlords) and having your name present on it may affect your financial future, even post-bankruptcy!
2. You will be prohibited from travelling overseas without permission: If you wish to travel overseas while bankrupt, you must submit an application to your trustee. The submission of an application does not necessarily ensure approval.
3. Bankruptcy rules are legally binding: Violating a bankruptcy law may land you in significant legal trouble.

Am I Eligible for bankruptcy?

Declaring bankruptcy in Australia has no minimum or maximum debt, however, an individual may only declare if these conditions apply:

• They are either present in or have a business in Australia.
• They are unable to pay debts as of the due date

There is also no fee to apply for bankruptcy.

How to Declare Bankruptcy

To apply for bankruptcy, you will need to submit a Bankruptcy Form with the Australian Financial Security Authority (AFSA). In some situations, you may also be required to submit additional forms to support your application. A situation of the sort may include an individual feeling their safety may be threatened if their personal information appears on the NPII, you need to demonstrate your connection to Australia (travel itinerary, etc), or if you are applying for bankruptcy as part of a business partnership.

Be sure to include all and any debts when applying and ensure all information present on the submission is accurate and well understood.

If you wish for a private trustee, you will need to complete a consent to act as a trustee form along with your application. This submission may be overturned by your creditors as they have the legal right to appoint a trustee of their choice.

Which Debts are Covered?

One of the benefits of declaring bankruptcy is that a large portion of your debts is covered. This means that an individual will not be required to pay their creditors the money that they owe them. Debts covered by declaring include:

• Phone bills
• Credit Card bills
• Overdrawn bank accounts
• Unpaid rent
• Gas and electricity bills
• Medical, legal, and accounting fees
• Unpaid personal loans

What Debts must be Paid While Bankrupt?

Bankruptcy covers a significant portion of debts; however, some must still be paid during the period. These debts include:

• Court penalties/fines
• Child support
• Government student help loans
• Any debts acquired after the bankruptcy period begins
• Unliquidated Debts

When should I get Legal Advice

Before entering bankruptcy, it is vital that you seek legal advice. As aforementioned, bankruptcy is a serious situation to find yourself in and it is important to seek assistance before making decisions that could affect your future. A Financial counsellor is a qualified individual who provides legal advice and assistance to people in financial strife. They are available in any state or territory and can help you with a range of issues, including:

1. Assessing your current financial situation
2. Advising you on negotiation methods with creditors
3. Negotiating directly with creditors
4. Informing on financial priorities
5. Develop plans/budgets with clients
6. Assist you in understanding your rights and responsibilities in your current situation.

Be referred to the best insolvency lawyers on the Sunshine Coast for bankruptcy matters

Types of Bankruptcy

In Australia, there are in general two types of bankruptcy: voluntary and involuntary.

1. Voluntary Bankruptcy: Otherwise known as a debtor’s petition, voluntary bankruptcy is the process in which an individual applies on their own accord. There is not a minimum requirement for this kind of bankruptcy as it is freely filed. If evidence is provided that the debtor simply does not want to pay their creditor, the request will be denied.
2. Involuntary Bankruptcy: Referred to as a creditors petition, involuntary bankruptcy allows creditors to declare their debtor bankrupt in a court of law. In order to file, several requirements must be provided:
   1. The debtor owes upwards of $5 000
   2. An act of bankruptcy must have been committed (and made evident) within the past 6 months

Bankruptcy Trustee

In cases of bankruptcy, a trustee will be assigned to an individual to oversee assets and affairs during the period. Their duties generally depend on the specifics of the situation and can vary depending on the type of bankruptcy filed. They are generally responsible for managing the funds and investigating the affairs of the bankrupt.

What Happens to my Possessions?

During your bankruptcy period, your trustee may have the authority to sell some of your possessions to return money to your creditors. You’re responsible for the declaration of any assets you have in your possession. Assets may include:

• Vehicles (may keep if under $8 150)
• Property
• Money in a bank account or house
• Household belongings

How do I Recover?

Bankruptcy may feel like the end of the line for some, but recovery is possible. By taking several steps, rebuilding a strong financial future.

1. Save Money:

This may seem obvious but saving money is an important step in recovering from bankruptcy and preventing yourself from entering similar situations that landed you in that position originally. A wise idea would be to set up a savings account in which automatic funds are taken from your income and placed into savings.

It may also be in your best interest to create a reasonable budget and stick to it to ensure spending isn’t excessive.

1. Improve Credit: Your credit will take a hit after experiencing bankruptcy as it will remain on your credit report from rather 2 years post-bankruptcy or 5 years from the day you became it (whichever is later). After this period, however, it is important to maintain payments on any debts you have. It is also recommended to deactivate any credit cards in your possession that are not in use.
2. Monitor Finances: It is wise to check your credit reports to prevent any errors from being counted against you and to simply build good financial habits.
3. Make an emergency fund: If it works for you, it’s an idea to put away any extra funds as an “emergency fund”. This money can be used in any financial emergencies that occur, such as loss of employment, to prevent you from falling into large debts.
4. Apply for a Secured Credit Card: A secured credit card is an efficient way to rebuild your credit score after it takes a large hit. A card of this sort requires a deposit and your access to credit relies on how large your deposit is.

Conclusion to Bankruptcy in Queensland

Bankruptcy is a serious occurrence, so it is important you are aware of the risks and responsibilities associated with it. It is important you seek legal assistance if you are considering declaring bankruptcy.

Be referred to the best insolvency lawyers on the Sunshine Coast for bankruptcy matters