The Merits And Disadvantages
The idea of bankruptcy can be daunting. Since it has been around, it has had a bad reputation, and we frequently encounter customers who are concerned about the prospect of declaring bankruptcy. It undoubtedly has drawbacks, and it’s never the best course of action for those facing financial difficulties. First and first, it should always be a priority to see if debts can be paid. If every other option has been tried and failed, it’s not entirely awful. In fact, it might be your best shot of getting out of debt and a fresh start. If you’re in financial trouble or are considering filing for bankruptcy because of it, it’s important to weigh the benefits and drawbacks before making your decision.
Benefits or Advantages of Bankruptcy:
• It does not result in a life sentence. The bankruptcy period does finish, and you are free to move on.
• Most of your debts will be permanently discharged in bankruptcy. These debts include credit card balances, payday loans, shortfalls on secured obligations, even personal guarantees provided on business loans, among others. The following section explores various debts that bankruptcy does not discharge.
• The harassment from creditors and debt collectors stops. Unsecured creditors are not allowed to get in touch with you once your bankruptcy has started; they must speak with your bankruptcy trustee instead.
• There are no filing costs or minimum debt requirements to declare bankruptcy. You can ask a competent personal insolvency professional for assistance with completing the papers and filing on your behalf; this service is typically gratuitous.
• While filing for bankruptcy, you can save money. You can save an unlimited amount while filing for bankruptcy. If you keep your money in a bank account up until you receive a bankruptcy discharge, they are safeguarded.
• It’s possible that you can keep your home. Most of the time, you can continue to live in your home while a third party negotiates a deal with your Trustee to keep the property.
• Important possessions, including furniture and accessories, are safeguarded.
• Vehicles may be safeguarded. Your vehicles will be yours to keep and protected in bankruptcy if their value is less than $8,150.
• Income-generating tools are safe. You may keep any tools that are utilized to generate income and are worth below the cutoff.
• Your employer’s superannuation payments are secure. You will be shielded from creditors and have access to your superannuation if it is paid to you at the correct rate. You can use it for retirement or an appropriate early withdrawal.
Superannuation withdrawals made during bankruptcy are safeguarded. The money paid will be safeguarded if you need to withdraw your superannuation and meet the eligibility requirements. When an asset is purchased with superannuation funds, the asset is also safeguarded.
• You are permitted to run a business under your own name. You are not required to report your bankruptcy if you decide to conduct business under your own name.
• Even if you are bankrupt, you can travel internationally. You must obtain the written consent of your Trustee, which is typically not a hardship.
• No one has publicly announced your bankruptcy. Your bankruptcy won’t vanish from your credit report until two years after you’ve been discharged from bankruptcy.
The drawbacks or negative effects of bankruptcy include:
• It typically lasts three years and one day.
• While you are filing for bankruptcy, you cannot purchase any property.
• Your ability to obtain the licenses you need to make a living may be affected by bankruptcy. To find out what happens if you file for bankruptcy, check with the relevant authority or your employment contract.
• The National Personal Insolvency Index (NPII) will always list your bankruptcy. The Australian Financial Security Authority keeps track of this information, and accessing it will cost you $15.
• You are ineligible to serve as a Self-Managed Superannuation Fund Trustee.
• You are ineligible to serve as a corporate director.
• Filing for bankruptcy does not discharge all debts. debts include as court-ordered fines, HECS debts, fraud-related debts, child support obligations, and debts for which a court has not yet determined how much you owe.
• Pay any unexpected funds to the bankruptcy trustee. You must pay any lottery, gambling, or inheritance winnings to your bankrupt estate if you do.
CrossRoads offers free initial guidance on these topics and is an authority on restructuring, turnaround, and insolvency. Please call 0410 555 999 for any further problem.