Bankruptcy is a legal status that offers a form of financial relief for individuals who find themselves unable to pay off their debts. Governed by the Bankruptcy Act 1966 in Australia, this process allows you to eliminate or discharge most of your unsecured debts, essentially providing you with a clean slate to start anew financially. However, it’s not a decision to be taken lightly, as it comes with a range of serious and long-lasting implications.
In Australia, the Australian Financial Security Authority (AFSA) is the government body responsible for administering and regulating the bankruptcy system. When you declare bankruptcy, you are essentially placing your financial affairs under the control of a trustee, who will manage the process of discharging your debts and may sell off certain assets to repay your creditors.
To be eligible for bankruptcy in Australia, you must be insolvent, meaning you are unable to pay your debts as they fall due. You can either voluntarily enter into bankruptcy by filing a Debtor’s Petition, or your creditors can force you into bankruptcy if you owe them at least $10,000 and have failed to make payments.
It’s important to note that bankruptcy covers most unsecured debts, such as credit card debts, personal loans, and utility bills. However, it does not eliminate all types of debts. For example, secured debts like mortgages, student loans, and certain types of fines are generally not covered.
One of the most significant drawbacks of declaring bankruptcy is its impact on your credit rating. In Australia, a bankruptcy will be listed on your credit report for a period of five years, or longer in some cases. This can severely limit your ability to secure loans, credit cards, or even certain types of employment during that time.
One of the immediate concerns when filing for bankruptcy is the potential loss of valuable assets. Certain assets may be sold off to repay your debts, which could include significant possessions like your home or car, depending on their value and the specifics of your case. It’s crucial to understand that while bankruptcy can relieve you of debt, it may come at the cost of losing assets that are important to you and your family.
If you’re declared bankrupt and your income surpasses a set threshold, you may be obligated to make contributions toward settling your debts. This is known as “income contributions” and is calculated based on your after-tax income, taking into account certain allowances for dependents and living expenses.
Once you’ve declared bankruptcy in Australia, You’ll need to obtain permission from your bankruptcy trustee to leave the country. This is a legal requirement under the Bankruptcy Act 1966. Failure to comply could result in penalties or an extension of your bankruptcy period. This restriction adds an extra layer of complexity to your personal and professional life, especially if travel is a significant aspect of your lifestyle or occupation.
Declaring bankruptcy can have a ripple effect on your professional life, especially if you’re in certain fields like law, finance, or real estate. Some professions have regulations that restrict or prohibit the practice of individuals who are bankrupt. Additionally, if you’re a business owner, you may face limitations on your ability to manage a company. This could mean stepping down from directorial roles or facing scrutiny when applying for business loans.
The decision to file for bankruptcy is not just a financial one; it carries emotional weight and can come with social stigma. Many people feel a sense of shame or failure when going through bankruptcy, which can strain personal relationships and affect mental well-being. The emotional toll can be as challenging to navigate as the financial aspects, making it important to seek emotional support from trusted friends, family, or professionals during this difficult period.
Regardless of your financial situation or what your property end goal looks like, almost everyone can benefit from using a mortgage broker. For Queenslanders trying to navigate an extremely competitive property market, partnering with a local Brisbane mortgage broker who knows the area can also be a tool to provide additional insights as well. In fact, just a handful of the benefits of using a mortgage broker include the following.
While banks offer many products and services, home loans are the speciality of mortgage brokers. Arguably, the superpower of a mortgage broker is their ability to turn the complexities of a lender’s policies into black and white information, which can be invaluable when it comes to making decisions about your financial future.
Did you know that Australia has over forty different lending providers? Your mortgage broker certainly does, along with the ins and outs of almost every one. A mortgage broker provides you with one point of contact and can save borrowers countless amounts of both time and money.
Trying to juggle work, social and home life around bank appointments has the potential to add extra stress to a home loan application. Mortgage brokers are all too aware of this, and instead apply a level of flexibility when it comes to ensuring that they’re on call and available for their clients, even if that means outside of business hours.
When going to a bank for your mortgage solutions, it’s important to remember that the person you’re dealing with is only able to present the bank’s own individual loan products. In comparison, it’s quite the opposite for a mortgage broker, as it’s you that takes centre stage on their priority list and can offer a wider variety of options.
Applying for a home loan can be a stressful experience if you don’t understand the technical terms being thrown around, or you feel like you’re not being told the entire truth. Working with a mortgage broker means that you have a partner to help you navigate this world, and will be the first to tell you if a certain product isn’t the ideal fit for you.
In addition, a local Brisbane mortgage broker will also have connections with other real estate professionals such as conveyancers and building and pest inspectors, which can help make life easier for the applicant.
This is often a wildly different approach to what consumers can expect from a bank, and the added convenience of only having to submit one set of documents also helps to push mortgage brokers as the ideal choice between the two.
Navigating the world of home loans isn’t easy, especially if you aren’t sure whether doctors for home loans are the right choice for you. Thankfully, partnering with a mortgage expert means that you have someone on your team to guide you through the process.
Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing 3,000 Australians with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.
If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Regardless of whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.
Navigating the world of home loans isn’t easy, especially if you aren’t sure whether doctors for home loans are the right choice for you. Thankfully, partnering with a mortgage expert means that you have someone on your team to guide you through the process.
Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing 3,000 Australians with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.
If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Regardless of whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.
From buying your first home to refinancing, commercial or construction loans – our free service takes the stress out of getting finance. We offer our services Australia wide so why not reach out to us today. We’d love to hear from you.
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