Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be convoluted and perplexing. A question we normally get asked here at Bankruptcy Experts Australia is 'what happens to my super if I file for Bankruptcy'? The reply for most is simple, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then nothing happens; your super is 100 % safe when it involves Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, think of the growing number of members of Self-Managed Super Funds ("SMSFs") lately; the ATO tells us it has increased Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it involves Bankruptcy?

Remember Bankruptcy Experts Australia is not suggesting this post is the whole story, if you have any questions feel free to call us on 1300 795 575. No matter if you call us or another person it does not matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we advise you find both legal and financial advice before proceeding with any of the actions proposed in this article.

What is a Disqualified Person?

First and foremost, if you are considering Bankruptcy, you can not be a part of a SMSF. Why? Because if you are dealing with bankruptcy, you will be classified as a 'disqualified person'. And a disqualified person cannot operate as an Individual Trustee. This poses a problem since usually most of the SMSFs are just 2 people, which means each of these members will need to also be the individual trustees. The role of trustee sets a lot of legal rules, and if you are in this role I would highly encourage you to become knowledgeable about them all-- including the fact that you can not 'know or suspect' that one of you are bankrupt. So you can notice how an individual bankruptcy can be quite harmful to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How long do I have to restructure my SMSF Fund after I'm bankrupt?

So what takes effect if one of the members of an SMSF does enter Bankruptcy?

For starters, the SMSF will have to be reorganized. This means that you will have to consider your whole structure and make certain it is meeting the basic conditions, including things like having a new trustee that is not suffering from issues with Bankruptcy. The Australian Tax office will supply you a 6 month 'grace period' to get this done before you face penalties. And bear in mind, sometimes the best plan would be to simply roll the fund into an industry or corporate fund.

Beyond these large scale restructuring issues, there is a lot of paperwork to deal with too, and you need to be continuously keeping the ATO informed of what is happening. This indicates you will need to let them know that you have a bankruptcy issue with your current trustee, that they are being removed as soon as possible know who the new trustee/director is. The Bankrupt will also need to inform the ATO using the form NAT 3036 (Found on the ATO website) and they must also notify ASIC of their resignation.

During that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are not sure call Bankruptcy Experts for some free advice on 1300 795 575.

What if I have a single member fund?

If you are a single member fund, then you will need to appoint a new director, and it will then end up being their duty to oversee the sale and relocation of assets into a managed fund. If there are two or more members, than the bankrupt member will have to resign and the other member will remove the property and halve the proceeds. They would then have to decide if they choose to remain as a single member SMSF, or if they want to roll everything into a managed fund. If both members are entering bankruptcy, then they would definitely need to sell all assets at once and transfer the liquid assets to the managed fund.

From this you can notice how when it comes to Bankruptcy, even when one single member is dealing with issues, it can affect the very existence of an SMSF. If you are already facing this trouble yourself, or with a partner in a SMSF, please seek financial advice to make certain you are satisfying the ATO requirements.

A simple solution ...

As I proposed earlier, a basic solution to your SMSF situation is to put your super back into a normal regulated managed fund before bankruptcy and save yourself all the problems outlined above. Bankruptcy is never easy, but getting proper advice is the best first step. If you want to discuss your possibilities further, give us a call at Bankruptcy Experts or visit our website: www.bankruptcyexperts.com.au or just give us a call on 1300 795 575.

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

Bankruptcy Australia is a tricky process, but I know from meeting with thousands facing the possibility of bankruptcy over the years, that not much worries people more than the idea of losing the family home. Almost everyone is sentimentally connected to their home - it's where the children have grown up, it's where you take pleasure in life on a day to day base.

Will you lose your house if you go bankrupt? The response is a resounding maybe. (not very helpful, I know) People typically presume it's an inevitable consequence and a part of Bankruptcy, and therefore push themselves to the brink of insanity to not lose the family home. But when it comes to the whole process of Bankruptcy, a key strength of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you've agreed to pay back the debt you are in.

So how is it possible to keep my Australia house, you ask? It's easier if I explain the basic theory behind the Bankruptcy process as administered by the trustee, then you'll have a clearer idea.

The role of the bankruptcy trustee is to firstly comply with the regulation of the bankruptcy act 1966 (it's a very dull read about 600 pages if you are curious).

Within that regulatory framework, the trustee is to help recuperate monies owed to your creditors, that is executed in a bunch of different ways but it mainly comes down to income and assets. The trustees role is to collect payments beyond your income threshold. The other role is to sell off any assets that can contribute to repaying your debts.

What this seems is that yes the trustee will sell your house right? Not necessarily. The only reason the trustee will sell off any asset including your house is to get money to repay your debts. If there is no equity on your property then it's pointless to sell your home. This is happening much more since the GFC as house prices in many regions have been heading south so what you paid 4 years ago may not always reflect the price today.

A quick word of advice here if you have a house in Australia and are looking at Bankruptcy: get an expert to help you through this process, there are loads of variables in these scenarios that have to be considered.

You might wonder, why would the bank want bankrupt clients? wouldn't they want to sell your house and not take the risk? The bank that has generously lent you the money for your house is generating good money every month in interest out of you, month in month out, so long as you keep up to date with your fees then the bank wants you in there at all costs. Ultimately however it's not the bank's call if the trustee decides that there is loads of equity in your house the trustee will force you and the bank to sell the house.

When you file for bankruptcy you are asked to mark the value of your house and the amount you owe on the house. A tip if you are attempting to work out the value of your house: use a registered valuer as this will provide you peace of mind, don't use your neighbours' gut feel advice or a real estate agents advice to get to this figure. When you get a valuer out to your house, see to it you tell the valuer to value the property for a quick sale, make sure you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to offer two valuations: one for a quick sale and one for a well marketed non time delicate sale. Nowadays that's not the case, but if you meet them and tell them you need to sell your home in the next 30 days you may sway the result. The idea is that you want a sensible sell now figure.

There are two main reasons this valuation system is critical to you: one you may have peace of mind ascertaining the market value of your house, and after that you can easily develop your equity position. Second of all, your home may be worth a lot more than you thought. Get some advice before doing this. The amount of times I've met clients that have sold their family home of 20 years only to discover I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another primary consideration is ownership, often houses are acquired in joint names. Simply put a couple may be a house 50/50 using both incomes to make the payments. If one party declares bankruptcy and the other party does not, the equity is only factored on the 50 % of the property.

When it relates to Bankruptcy, this is just one of possibly numerous scenarios that are possible when it comes to the family home. Bear in mind the non-bankrupt party can buy the bankrupt's part of the property in bankruptcy also. I need to repeat this but get some help on this area of Bankruptcy because it is very tricky and every case is different.

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 speak to Bankruptcy Experts Australia on 1300 795 575, or visit our website: www.bankruptcyexperts.com.au.

Bankruptcy in Australia - Who do I speak to?

Should I speak to my accountant about Bankruptcy?

The answer seems obvious doesn't it: if anyone knows your financial situation well in Australia, It's going to be your accountant. However, the short answer is a resounding No! It's not that your accountant may not have your best interests at heart when it comes to Bankruptcy, it's that his knowledge lie in helping you save you money at tax time, lowering your tax liability and lodging your BAS.

Most accounting degrees will devote very little to no time on insolvency, it's generally performed as a post graduate speciality course for those who wish to work in the field. Unless your accountant is an insolvency specialist, he wouldn't know that a lot about the implications of Bankruptcy, I can guarantee you insolvency specialists know much about tax returns or BAS in. If you do manage to find an insolvency accounting firm in Australia, they tend to be large firms with very nice offices who charge accordingly.

Should I speak to my Solicitor about Bankruptcy?

No! You can speak to your solicitor in Australia but more than likely it won't do you much good. Solicitors are certainly good at undertaking things lawyers do, like assisting you do your Will and buying your house and keeping you out of court if you're lucky. When it relates to Bankruptcy, the specialists in Australia have the tendency to have either a legal or accounting experience, and the reason for that is simply that you can't enrol in the post graduate study to become a qualified insolvency practitioner unless you have a law or accounting degree.

Just as there are a couple of insolvency accounting firms, there are very few insolvency legal practices in Australia, and yes if you find one you will pay a considerable price for their expertise.

Should I speak to a financial counsellor about Bankruptcy?

Yes! There are a lot of financial counselling services to guide you with this, they have no hidden agendas and they're a splendid option for helping you think through your situation when it comes to Bankruptcy. If you find yourself stressing constantly, not sleeping, not eating or over-eating and thinking about money pressures constantly, then get some help.

There are also charities around Australia like Lifeline that offer a wonderful service. They will be a sounding board if you just need somebody to talk about with you what your possibilities are. Don't let your financial issue destroy your life - ultimately it's just money.

If you wish to learn more about what to do, where to turn and what points to ask about Bankruptcy, then feel free to contact Bankruptcy Experts Australia on 1300 795 575, or visit our website: www.bankruptcyexperts.com.au

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

Bankruptcy in Australia - does it matter if it is voluntary?

When it comes to Bankruptcy Australia, usually people aren't aware that there are both voluntary, and involuntary bankruptcy - both of these have unique methods and guidelines.

Involuntary bankruptcy arises when a person you owe money to involves the court to declare you bankrupt. Commonly when you get one of these notices, you have normally 21 days to pay all the debt. If you do not, then the creditor goes back to the court and asks the court to provide a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the documentation in and after that you are bankrupt.

You can object to a bankruptcy notice by going to court shortly after the 21 days have expired and put your case forward, to stop it going to the next level. Apart from the way you became bankrupt there is in reality no distinction between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're managed to in the same way.

However, when it comes to Bankruptcy for this, the stress, torment and fear that accompanies this method is incredible. If you think you are more than likely to be made bankrupt by someone, get some tips and act on that advice. Generally I've found it's always much better to know what you can and can't do before you have someone else bankrupt you. Once you are bankrupt, it's typically far too late.

Voluntary Bankruptcy

Nevertheless, when it comes to Bankruptcy, sometimes there are times that it is the most effective option. So you may want to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the same for everybody of course, but commonly I find that one way you could work it out is to figure out just how long it will take you to pay every one of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may assist you make that decision, and help you to understand Bankruptcy.

Once, I had an 80 year old pensioner, who came to me once regarding * Bankrupcty tell me that her credit card statement calculated how long her debt would take to pay at the rate she was paying off her account, and it was 35 years! Imagine 35 years for one credit card bill.

Credit rating damage can help you think this through. If you move house and overlook to pay your $30 phone bill for 6 months more, it's very likely the telephone company will default your credit file. That default will sit on your file for 5 years, so for $30 you can have your credit file seriously damaged for that period of time - and all of this will affect how you need to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is wrong. The punishment doesn't seem to equate to the crime in my book. So if you currently have defaults on your credit report for 5 years, bear in mind that bankruptcy is on your credit file for a total 7 years then its wiped off completely.

So if your credit rating is a big factor in trying to decide whether to participate in a Debt Agreement or Personal Insolvency Agreement or Bankruptcy remember they will all sit on your credit file for a total of 7 years. The biggest difference is that with a DA or PIA you repay the money and still have it on your file for 7 years.

Bankruptcy

I have talked about the word a few times now, but when it comes down to it, Bankruptcy is the biggest part, and the element more people are afraid of when they come to me to talk about their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this country the arrangements are very generous: you can go bankrupt owing millions of dollars and after 3 years it's all finished with no strings attached. As compared to countries like the United States, our bankruptcy laws are very generous.

I don't pretend to know why that is but a couple of hundred years ago debtors went to prison. These days I suppose the government finds that the sooner it can get you back on your feet working and paying tax, the better. It makes more sense than locking you up which costs the taxpayer anyway.

Bankruptcy wipes every one of your debts including ATO debts except for a few things:

·         Centrelink Debts, Court Fines like parking and speeding fines.

·         HECS or Fee Help loans.

·         Money to take care of a car accident if the car was not insured.

There is a lot more that can be said about doing this and Bankruptcy in general but the objective of this blog was to help you decide between a few possible options. When getting some advice, remember that there are always possibilities when it relates to Bankruptcy in Australia, so do some research, and Good luck!

If you wish to learn more about precisely what to do, where to turn and what questions to ask about Bankruptcy, then feel free to check with Bankruptcy Experts Australia on 1300 795 575, or visit our website:bankruptcyexperts.com.au

Bankruptcy in Australia - Will my income be changed if I go bankrupt?

Bankruptcy Australia is a complicated process, and you should be sure you get the right insight. And when it comes to your income being affected, the answer to the question is maybe. The very first thing you have to know about going bankrupt is there is no constraint on how much you can earn. However, I will say that your income is a serious consideration when working through when it comes to Bankruptcy.

The very first thing you need to understand about this area of Bankruptcy is just how much you can earn before you start paying back money to your creditors via your trustee (see table below).

Net income is the pre-tax/ in the hand quantity you earn annually. A dependant is someone who lives with you and earns less than $3,124 per year (regardless of their age).

You can request a hardship variation that raises the threshold amount, if you have financial commitments in Australia like medical, child care, significant travel to and from your job, or a circumstance where your partner used to work but is not able to support the family income.

Some of the useful parts of Bankruptcy is that your employer will not be told when you file for bankruptcy. Also, Child support is always taken into consideration in bankruptcy, if you receive child support that is not factored in as income. If you pay child support this will be also thought about, for example if you pay $5,000 child support each year and you have no dependents living with you then your revised net income limit will be $55,332.10.

There are much more issues covering income and what is or isn't thought of as income - if you're unsure, it's recommended to get experienced advice. The reason you will need to consider your income as a part of the Big 5 questions here is that bankruptcy is in some situations not an economically sensible option.

If one of your creditors is the ATO (for unpaid taxes), then your tax refund can be taken by the ATO whilst you are bankrupt to contribute toward your tax bill. If you don't have a tax bill then you will keep your tax refund provided that doesn't take you over your threshold income restrictions.

If you believe that when it comes to Bankruptcy, your circumstance is more complicated, then feel free to get qualified advice in Australia. I may sound like a broken record, but bear in mind that it's always a smart idea to overcome these options before declaring bankruptcy, because once you have filed the paperwork it's far too late to change your mind.

If you intend to find out more about what to do, where to turn and what questions to ask about Bankruptcy, then don't hesitate to contact Bankruptcy Experts Australia on 1300 795 575, or explore our website: www.bankruptcyexperts.com.au