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Vadim Ru

How to File for Bankruptcy

No one wants to file for bankruptcy if they can help it. However, doing this can be the first step on the road to full financial recovery after a tough period of money worries. This is a process that lets you wipe the slate clean and start all over again with bankruptcy loan.

Therefore, it makes sense that you find out how to do this as easily and swiftly as possible.

 

Understand the Criteria

This process is carried out according to the Bankruptcy Act 1966. There are only two requirements for filing for bankruptcy in Australia. These are as follows:

1. You are insolvent, meaning that you are unable to pay the debts that you owe.

2. You are currently in Australia or have a residential or business connection to the country.

Bear in mind that there is no fee charged for filing for bankruptcy. Also, there are no upper or lower limits in terms of the amount that you need to owe in order to do this. You need to decide on your own whether the amount that you owe is too much for you to be able to pay it back.

 

File with the Australian Financial Security Authority

Your next step is to fill in the appropriate forms and file them with ASFA. You can also do this through a Registered Trustee if necessary.

There are a few different forms involved in this process. They include:

A Debtor’s Petition. This is the form where you get the chance to explain that you are insolvent and are filing for insolvency.

A Statement of Affairs. In this document, you will explain exactly why you are filing for bankruptcy, together with details of your liabilities and assets.

• Acknowledgements. These are all necessary to prove that you have read and understood all of the relevant information.

These forms are all quite straight-forward to complete and shouldn’t take you very long to finish. You then present them to ASFA.

 

What Happens Next?

You will now be declared bankrupt. This means that your existing debts will be canceled and your creditors will be legally barred from chasing you for them.

There are a few exceptions, such as if you have been ordered to pay any fines or penalties by a court. Child maintenance won’t be affected by this procedure either.

Remember that secured loans still need to be paid. This is because the lender can repossess the property or assets that are secured against the loan. For example, if your home has a mortgage on it then it is at risk.

Normally, you will be bankrupt for a period of 3 years. However, this can vary depending upon the circumstances.

In the Future

One of the big worries for people in this situation is around their credit score. Filing for bankruptcy will definitely affect this.

This will make it more difficult for you to get a loan or credit card from a bank, for example. However, you can still get a no credit check loan sorted out without any problems.

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