Bankruptcy, yes or no?

I'm after some sage advice. I was made redundant last November from a well paying job. I have loans and credit cards that I literally cannot pay back. I do have a temporary job now but the pay just covers the rent and day to day living. To make matters worst, I now have my son living with me as he has started university. He needs to be fed too and most know how much a strapping 18yo male puts away.

In a nutshell, without the card repayments am just scraping by.

Is declaring bankruptcy an option? There is no way I can pay back $20,000 on my current wage. Before, yes but not now.

Any input would be gratefully accepted.

P.S Given what is happening at Whyalla at the moment, I guess I'm on the low end of the scale. You can't pay a $300K mortgage on dole payment.

Talk to your credit providers early, they are happier when they know what is going on. You might be able to amalgamate everything into a lower interest loan.
not sure bankruptcy is a real option as there are downsides (most of which which I can't recall at the moment) like real difficulties in getting loans/credit int he future

Unfortunately a lot of hurt in Townsville too for ex Yabulu Nickel workers. To Clive Palmer its a high stakes game - to the every day Mums and Dads who used to work there it is a life destroying hit - not even redundancy payments to rely upon in the short term.

Before making any rash decisions seek support from financial crisis support agencies, there may be some better avenues than bankrupcy

https://www.employment.gov.au/help-w...lost-their-job & https://docs.employment.gov.au/node/35546


https://www.humanservices.gov.au/cus...made-redundant

Hi wireliner, The best option is possibly a part 9 debt agreement. These are run by various companies such as those who advertise on TV. One that comes to mind is Fox Symes, usual disclaimer - no affiliation etc. These agreements are set up so you can pay your debts based on what you can afford based on your current financial situation not how much you owe.
They are there to give you a chance to get back on your feet. I believe the interest stops which is very important so you don't go backwards while trying to get it under control. There is a cost but in the end the pressure comes off you straight away as creditors can't take legal action against you which can add substantially to your debt.
This is important as this can also lead to further stress and other issues like depression which you don't need when you are trying to get your life back on track.
Once you take these pressures off yourself you will sleep better and be able to move forward with your life.
Thank little Johnny Howard for this, he introduced the legislation when he was in government.
Best of luck with this mate,
Cheers, Ian

I have formal accounting qualifications so need to be clear here - get some proper, tailored advice and don't make these decisions based on what I. or anyone else online says, as we cannot truely know your personal situation.

Having said that I have been in a similar circumstance. I was down and out, a small business owner who just maxed out a $20k credit card to make payroll and I had $1k in the bank and the mortgage due in 2 days. The solution I came up with was to ask for help. I got a loan from two close friends, re-doubled my efforts and built back up. There is always more money to be earned - it is just a matter of what you trade for it. I traded time - slept in the office 3 nights a week working 6 long days but got there.

You can come out of this, it isn't a dead end. But it is hard, and asking for help is hard too. If you are feeling down I also suggest reaching out to Beyond Blue - a great organisation - 1300 224 636

And good luck.

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Originally Posted by wireliner

Is declaring bankruptcy an option?

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Yes, and it's perfectly legal. Also the stigma attached to it in generations past is no longer there.

However it is not as simple and clear cut and other options may be better in your circumstances as it will drastically alter what ever assets you may have (like your hobby workshop and tools :o ) so I would suggest you seek multiple financial and legal advice.

For your legal advice go to a specialist lawyer in the field of bankruptcy as their advice will be worth it.

Peter.

Btw do you own a house and if so is the loan from War Service Loans?

Whilst there are downsides to bankruptcy, there are also advantages. We have a close family member who decided to take this route at the age of 30ish, and it was one of his best decisions.

Another option is to look into Bills of Exchange, which are legal in Australia. I know of several people who have also gone this way with good results. Perhaps you should contact your local Community Legal Advice Group. In Melbourne it is clrg.info and they may be able to point you in a direction that you had not thought of previously.

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Originally Posted by GentleBen

I have formal accounting qualifications so need to be clear here - get some proper, tailored advice and don't make these decisions based on what I. or anyone else online says, as we cannot truely know your personal situation.

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Wireliner, I totally agree with GentleBen's comment. Whilst every reply here will give you a possible aspect for your situation, by seeking proper professional help you should receive from an an independent financial professional all possible financial avenues to help you through this crisis, and from a Lawyer, the current legal situation regarding other avenues, one of which would a bankruptcy option.

Professional help does cost money but for a quality outcome it can be well spent (Think buying quality tools versus the cheap ones available in the discount variety stores). You may try searching on the internet for government sponsored financial counsellors and free legal aid.

We all hope the best for you.

Best wishes scrapwood.

Sorry to hear of your plight. Have you any superannuation funds that you could access through "hardship" until things improve?

Firstly thank you all for your advice. I have done research and a Part 9 solution seems to be worse than biting the bullet and going bankrupt. I don't have many assets, the result of 2 disastrous marriages. I cannot access my super as I'm not old enough and not in what they consider "financial hardship". Lord knows, I have plenty in it too.

I guess, I'll find a lawyer and discuss it. I honestly see no other way out. My Budget was a dead loss. They didn't want to help at all because it was impossible.

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Originally Posted by wireliner

I don't have many assets, the result of 2 disastrous marriages. I feel your pain....

My Budget was a dead loss. Yup. Gotta have an income so you can give it to them.

I cannot access my super as I'm not old enough and not in what they consider "financial hardship". Lord knows, I have plenty in it too.

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I would persist with looking at Super. Let's face it ~$20,000 taken out now will be a whole lot better for your sanity than whatever it will become in weekly income down the track.

I'm not so sure that your age has a whole lot to do with it - I believe it will be more a case of convincing them that it would be the best long term solution - and a letter from a Solicitor would assist that immeasurably I would think.

AFAIK, they (the Supers) make these decisions internally, so it's a matter of giving them the right info. DO NOT TAKE "NO" as the end answer. Ring back and speak to someone else.

More than anything, STAY CALM - even if it takes prescribed Valium, because you won't be able to think clearly (or at all) if you don't.....and you CAN trust me on that one.

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Originally Posted by FenceFurniture

I'm not so sure that your age has a whole lot to do with it - I believe it will be more a case of convincing them that it would be the best long term solution - and a letter from a Solicitor would assist that immeasurably I would think.

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Early withdrawal of super is governed by taxation laws and from the ATO website:

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Access due to severe financial hardship

You may be able to withdraw some of your super if you have received eligible government income support payments continuously for 26 weeks and are unable to meet reasonable and immediate family living expenses.

A super withdrawal due to severe financial hardship is paid and taxed as a normal super lump sum.

The minimum amount that can be paid is $1,000 and the maximum amount is $10,000. You can only make one withdrawal from your super fund because of severe financial hardship in any 12-month period.

Contact your super fund to request access to your super due to severe financial hardship.

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Peter.

Been there done that. The first thing to do is to contact your CC provider, ASAP, as they will stop the interest amount adding up, ask for the hardship department in accounts. I did this with a Finance company, and explained that the other half had left me in considerable debt, and that I was on a disability support pension. They asked why did I stop paying them, and explained that my payments were only just covering the interest. They agreed to stop the interest and then asked what was the maximum amount I could afford to pay, I gave them a figure and they asked for a bit more, to which I replied no way, they then said OK. This was in 2007, after 7 years they were paid out. I had been a bankrupt prior (it ended in 2007 went for 5 years) and trying to get a loan to buy a decent car or anything is out of the question. Bankruptcy will allow you tools of trade, a motor vehicle to the value of $1500 IIRC, and furniture essentials and not much else, no fancy home entertainment unit, home theatre etc. Bankruptcy to me is the last resort, only when ALL else fails.
I am now a sufferer of severe depression, because of all this. If you get to a feeling of everything getting too much for you remember to contact BEYOND BLUE.
Hope everything works out OK for you and GOOD LUCK.

Kryn

Kryn's advice seems sound.

Remember, the banks hate writing off money, and a bankrupt customer forces them to do just that. It is therefore in their own interests to help you out. They will forgo interest income to ensure they get their principal back. Contact them, negotiate a plan, and buy yourself some time to get yourself back on track. Act sooner than later.

This advice and several dollars will get you a cup of coffee, usually.

In the US a bankruptcy remains on your credit report for seven years. I'm sure that with funny games, etc. it will be on your file for closer to eight years. This will make it difficult to obtain credit of any type for that period of time.

EXCEPT

Because there is a limit to the time between bankruptcy filings, there are companies that will try to take advantage of you. These companies will offer credit at outrageous interest rates plus ridiculous fees. They know that you can't file for bankruptcy again and they will gouge you for everything that they can.

In the US, the time on the credit file is from the last payment or bankruptcy filing whichever is the most recent. Once that you file, do not make any payments on the debts discharged in bankruptcy as this will start the clock all over again.

In the US, the debts are usually sold to debt collectors for a few percent of face value. This is where the time factors in. If they can convince you to pay a few dollars on the debt, the clock starts all over again. I've run into debt collectors looking for people that moved out of the neighborhood 20+ years ago. I'll tell them, "The last that I've heard is that they moved to Canada."

Good luck with your decision.