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

When people in Australia come to me planning to discuss Bankruptcy, they are always packed with questions. The internet has plenty of information, but far too much of it is confusing or contradicts itself, so I make it my mission to try and make it clearer. One of the most standard problems is 'Will I lose my business if I declare bankruptcy?' The concise answer is no. If you are a manager of a business any shape or size you can maintain your business if you want to. In Australia, businesses that eventually are insolvent have a few options for instance, liquidation, voluntary administration and so on. It's people who go bankrupt not businesses.

Bankruptcy is a complicated area so get some reliable advice on this if you have a business. Generally speaking, the financial obligations in a business and personal debts go together when a business owner goes bankrupt. There are several necessary 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 once you're bankrupt.

A constraint that applies when you are actually bankrupt as a business owner is that you can be in your own business as a sole trader only. Generally there are things you should reveal as an aspect of that but in a nutshell you can still run your business. For some business owners, bankruptcy impacts their ability to run the business because of the licensing issues. Such as, if you run a building company, your license will be suspended once you're bankrupt and as a consequence you can not trade without that license, so make sure you are asking the appropriate questions when it comes to licenses and Bankruptcy in Australia.

Having said that if your business is not impacted directly by such issues, then you'll have 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 after that open the doors the next day like absolutely nothing had happened. There are laws in place to prevent what is called phoenix companies popping up out of the ashes of an old company.

Having said that, it's just a point of talking to the suitable people about Bankruptcy. In this situation you may think you need a liquidator for your business, and you could be right, but remember that every liquidator is unique and have their own motives. Liquidators profit from your liquidation - heaps of money - so exactly what advice do you think you will get?

When it comes to Bankruptcy, I consider that giving generic advice in this area is possibly unsafe as it can have very significant implications for directors and business owners. This is because it is just 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 reduce to the size of the business you run even though you are bankrupt. You can employ staff. You can constantly deal with your distributors 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 too uneasy about what you can and can't do as a business owner, just get the right 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 get in touch with Bankruptcy Experts Australia on 1300 795 575, or visit our website: www.bankruptcyexperts.com.au

Bankruptcy in Australia - Choices, Choice, Choices

When it comes down to Bankruptcy Australia, there are a great deal of choices that we get given depending upon who we are, who we talk to, and what exactly has happened. The most common confusion I see with Bankruptcy is when it comes to selecting between Debt Consolidation, Personal Insolvency Agreements, and Bankruptcy itself.

Should I consolidate my debts?

When it comes to Bankruptcy in Australia, much of the information you receive on this subject will reflect the interests of the advice giver. Therefore, if you call a debt consolidation provider, I can guarantee you they will tell you to consolidate your debts. The debt consolidation operation is a multi-billion dollar industry making money in one very straightforward way: charging you a fee for assisting you wrap every one of your credit card and personal loans into just one neat and tidy package.

I hate to tell you this but these people aren't doing it for free. Please do not misunderstand me: if you consider your financial troubles in Australia may be solved by paying less interest, then go on and check out the choices. Even a small amount of interest saved over years quickly adds up.

Normally I find if you are reading this blog you've most likely attempted to consolidate your debts already and come to the following realisations such as these:

• Your credit rating is no good, and your credit file definitely has nonpayments on it so nobody will offer 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 lot of difference,.

• You've most probably arrived at the stage where you've had more than enough, you're mentally fatigued, you can't go on one more day ignoring blocked calls on your phone, ignoring the demands in the mail etc.

Personal Insolvency Agreements

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

Freedom is the main point Personal Insolvency Agreements (PIA) have in their favour. They're also administered by a registered and - might I add - regulated trustee including the government trustee ITSA, and not a private company that advertises on TV. Basically this method resembles Debt Agreements (DA): The trustee has a meeting with the people you owe money to and these guys negotiate a deal on your behalf. You can offer a lump sum settlement figure or take part in a payment plan, or maybe you can offer them assets rather than cash. This might sound acceptable when it comes to the troubles with Bankruptcy - that is up until you discover that one of the difficulties with PIA's is that 75 % of the people you owe money to need to agree on the deal. If they don't, your proposal is denied or will have to be renegotiated.

Generally people you owe money prefer all their money back as well as interest. Sometimes they'll go for beneath the amount you owe them - it's generally a percentage of the debt -  but allow me to stress this part: 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 really settle for.

Most of the time 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 agreed 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 opting for 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 shrewd lawyers and some very clever frameworks 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 contact Bankruptcy Experts Australia on 1300 795 575, or visit our website: bankruptcyexperts.com.au