Declaring Bankruptcy- Things you need to know before you file for bankruptcy

For someone to declare themselves bankrupt, is not easy. It’s a complicated task and require a great deal of patience and proper knowledge. If you are finding yourself in debt and wondering how to declare bankruptcy in Australia, make sure you talk to your financial advisor.

While some people have the misconception that declaring bankruptcy would free them of all their troubles, it is not the case. There are certain financial obligations which they have to fulfill and these are actually ordered by the court to be fulfilled.

If you have had any previous debts against your assets, the first thing which happens is that all your assets are liquidated. Also the court appoints a trustee who is responsible for handling all your financial situation. Any surplus funds that you possess would also be liquidated and the amount would be used to pay off the rest of your debts.

It should also be known that the person who is in debt doesn’t necessarily have to be the initiator for bankruptcy. Your creditor can also file a petition for your bankruptcy in the court. Normally a debtor who files the bankruptcy petition is usually better off than the former. This is because you would then be free to choose your own trustee and even control the situation to a certain extent.

 

Once the filing in court has taken place, you would be expected to make an appearance in court. You could either agree to the claim or deny that you are not bankrupt. Once you agree to bankruptcy the court would immediately appoint a trustee. There would also be certain policies, procedures and restrictions made on you. If you choose to claim that you are not bankrupt you would then go about proving it. You might need to prove that you don’t owe any debt to the said creditor. Either that or you have made all the necessary payments. Plus if you are in debt you have certain ways to pay off all those debts.

When you do declare being bankrupt the curt would appoint a trustee who is responsible for handling your financial affairs. They would be in charge of your financial situation for the next three years.

How do you know you qualify for bankruptcy?

Your circumstances would help in determining whether you are supposed to file for chapter or chapter 13 bankruptcy. The benefits of a chapter seven bankruptcy is that it helps the debtor discharge of their debts sooner and start a new life afresh. While you may not have to pay off all the debt you are still entitled to pay child support and alimony.

In case you qualify for chapter 13 bankruptcy, you would have to make a tree to five year payment plan during which you are expected to pay off all your debts. You need to contribute a set amount on a monthly basis towards covering your debt.

By | 2019-06-05T07:21:22+00:00 June 5th, 2019|Business Law|0 Comments

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