Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be complicated and difficult to understand. A question we often get asked here over at Bankruptcy Advice Perth is 'what happens to my super if I file for Bankruptcy'? The answer for most is simple, if your super is in a regulated fund or industry fund like Sunsuper or Host Plus then virtually 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, take into consideration the evolving number of members of Self-Managed Super Funds ("SMSFs") lately; the ATO tells us it has grown Australia-wide from 758,589 in 2009 to 1,011,689 in 2014. So what happens to these Superfunds when it comes down to Bankruptcy?

Remember Bankruptcy Advice Perth is not proposing this article is the complete story, if you have any questions feel free to contact us on 1300 879 867. Whether or not 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 taking into account Bankruptcy, you can not be a part of a SMSF. Why? Because if you are going up against bankruptcy, you will be labeled as a 'disqualified person'. And a disqualified individual cannot operate as an Individual Trustee. This poses a problem due to the fact that usually most of the SMSFs are just 2 people, which means the two of these members must also be the individual trustees. The duty of trustee causes a lot of legal rules, and if you are in this role I would highly encourage you to be aware of them all-- for example the fact that you can not 'know or suspect' that one of you are bankrupt. So you can see how an individual bankruptcy can be quite destructive to a SMSF and as you can imagine the process of Bankruptcy for a SMSF is rather convoluted.

How long do I have so as to restructure my SMSF Fund once I'm bankrupt?

So what transpires 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 entire 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 very 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 suggests you have to let them know that you have a bankruptcy problem 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.

Over that 6 month period you will need to remove the Bankrupt from the SMSF-- including their property and assets. Remember if you are uncertain call Bankruptcy Advice Perth for some free advice on 1300 879 867.

What if I have a single member fund?

If you are a single member fund, then you will have to appoint a new director, and it will then become their responsibility to oversee the sale and relocation of assets into a managed fund. If there are two or more members, than the bankrupt member will need to resign and the other member will take away the property and halve the proceeds. They would then want to decide if they would like to remain as a single member SMSF, or if they intend to roll everything into a managed fund. If both members are entering bankruptcy, then they would need to sell all assets as soon as possible 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 facing issues, it can affect the very existence of an SMSF. If you are already facing this concern yourself, or with a partner in a SMSF, please seek financial advice to make certain you are fulfilling the ATO requirements.

A simple solution ...

As I proposed earlier, a simple solution to your SMSF issue is to put your super back into a normal regulated managed fund prior to bankruptcy and save yourself all the frustrations outlined above. Bankruptcy is never easy, but getting proper advice is the best initial step. If you want to discuss your options further, give us a call at Bankruptcy Advice Perth or visit our website: www.bankruptcy-advice.com.au/Perth.com.au or just call us on 1300 879 867.

Bankruptcy, Will I lose my Superannuation?

Bankruptcy in Australia can be convoluted and confusing. A question we often get asked here at Bankruptcy Advice Brisbane is 'what happens to my super if I declare Bankruptcy'? The answer for most is easy, if your super is simply in a regulated fund or industry fund like Sunsuper or Host Plus then virtually nothing happens; your super is 100 % safe when it comes to Bankruptcy.

What if I have a Self Managed Super Fund?

This is a growing concern, look at the increasing 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 concerns Bankruptcy?

Remember Bankruptcy Advice Brisbane is not suggesting this post is the complete story, if you have any questions feel free to call us on 1300 879 867. Regardless if you call us or another person it doesn't matter, just please don't walk into bankruptcy blind when it comes to your SMSF actually we encourage you seek 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 thinking about Bankruptcy, you can not be a part of a SMSF. Why? Because if you are being confronted by 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 the two of these members need to also be the individual trustees. The job of trustee poses a lot of legal rules, and if you are in this role I would highly recommend you to be familiar with them all-- for example 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 rather damaging to a SMSF and as you can assume the process of Bankruptcy for a SMSF is rather convoluted.

How long do I have so as to restructure my SMSF Fund once I'm bankrupt?

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

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

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

During the course of 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 Advice Brisbane for some free advice on 1300 879 867.

What if I use a single member fund?

If you are a single member fund, then you will need to appoint a new director, and it will then become their obligation to oversee the sale and transfer 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 clear away the property and halve the proceeds. They would then need to decide if they want to remain as a single member SMSF, or if they intend to roll it all into a managed fund. If both members are entering bankruptcy, then they will need to sell all assets at once and transfer the liquid assets to the managed fund.

From this you can see how when it comes to Bankruptcy, even when one single member is facing issues, it can affect the very existence of an SMSF. If you are actually facing this problem 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 problem is to put your super back into a normal regulated managed fund prior to bankruptcy and save yourself all the problems outlined above. Bankruptcy is never easy, but finding proper advice is the best 1st step. If you want to discuss your options further, give us a call at Bankruptcy Advice Brisbane or visit our website: www.bankruptcy-advice.com.au/Brisbane.com.au or just call us on 1300 879 867.

Bankruptcy in Brisbane - Will I lose my house if I go bankrupt?

Bankruptcy Brisbane is a confusing process, but I know from meeting with thousands facing the possibility of bankruptcy over the years, that virtually nothing troubles people more than the idea of losing the family house. Almost every person is emotionally connected to their home - it's where the children have grown up, it's where you enjoy life on a day to day base.

Will you lose your home if you go bankrupt? The answer is a resounding maybe. (not very helpful, I know) People generally assume it's an inevitable consequence and a part of Bankruptcy, and because of this 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 benefit of Debt Agreements and Personal Insolvency Agreements is you can keep your house. The reason is simple: you've accepted to pay back the debt you are in.

So how is it possible to keep my Brisbane 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 more clear picture.

The responsibility of the bankruptcy trustee is to firstly agree to the regulation of the bankruptcy act 1966 (it's a very dry read about 600 pages if you are eager).

Within that regulatory framework, the trustee is to help recover 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 further role is to sell off any assets that can contribute to fixing your debts.

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

A quick tip here if you have a house in Brisbane and are looking at Bankruptcy: get a professional to help you through this process, there are a lot of variables in these scenarios that should be considered.

You might wonder, why would the bank want bankrupt customers? wouldn't they want to sell your house and not take the risk? The bank that has kindly lent you the money for your house is generating good money every month in interest out of you, month in month out, just as long as you keep up to date with your repayments then the bank wants you in there at all costs. Essentially however it's not the bank's call if the trustee determines that there is plenty 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 level you owe on the house. A tip if you are trying 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 tips or a real estate agents advice to come to this figure. When you get a valuer out to your property, make certain you tell the valuer to value the property for a quick sale, make certain you mow the lawn and don't leave the kitchen in a mess also.

Valuers used to provide 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 let them know you need to sell your home in the next 30 days you may control the result. The idea is that you want a realistic sell now figure.

There are two reasons this valuation technique is critical to you: one you will certainly have peace of mind ascertaining the market value of your house, then afterwards you can easily set up your equity position. Second of all, your property may be really worth even more than you thought. Get some suggestions before doing this. The number of times I've met clients that have sold their family home of 20 years just to discover I could of helped them keep it; unfortunately this happens all too often

When it comes to Bankruptcy and houses, another significant consideration is ownership, in most cases houses are acquired in joint names. To puts it simply a couple may be a house 50/50 using both incomes to make the payments. If one party declares bankruptcy and the other party doesn't, the equity is only factored on the 50 % of the property.

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

If you want to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to contact Bankruptcy Advice Brisbane on 1300 879 867, or visit our website: www.bankruptcy-advice.com.au/Brisbane.

Bankruptcy in Brisbane - Who exactly do I talk to?

Should I consult with my accountant about Bankruptcy?

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

Most accounting degrees will put in hardly any to no time on bankruptcy, it's generally performed as a post graduate speciality program for those who intend to work in the field. Unless your accountant is an insolvency expert, 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 happen to find an insolvency accounting firm in Brisbane, they have the tendency to be large firms with very nice offices who charge accordingly.

Should I talk with my Solicitor about Bankruptcy?

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

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

Should I talk to a financial counsellor about Bankruptcy?

Yes! There are plenty of financial counselling services that can help you with this, they have no hidden agendas and they're a fabulous option for helping you think through your circumstance when it comes to Bankruptcy. If you end up freaking out constantly, not sleeping, not eating or over-eating and thinking of money pressures at all times, then get some help.

There are also charities around Brisbane like Lifeline that offer a fantastic service. They will be a sounding board if you just need a person to go over with you what your choices are. Don't let your financial issue destroy your life - in the end it's just money.

If you wish to learn more about what to do, where to turn and what issues to ask about Bankruptcy, then feel free to call Bankruptcy Advice Brisbane on 1300 879 867, or visit our website: www.bankruptcy-advice.com.au/Brisbane .

Bankruptcy in Brisbane - Will I lose my business if I go bankrupt?

When people in Brisbane come to me planning to talk about Bankruptcy, they are usually full of 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 very most general matters is 'Will I lose my business if I declare bankruptcy?' The short answer is no. If you are an owner of a business any shape or size you can maintain your business if you wish to. In Brisbane, businesses that end up being insolvent have a few options such as liquidation, voluntary administration and so on. It's people who go bankrupt not businesses.

Bankruptcy is a complicated area so get some expert advice on this one if you have a business. Generally speaking, the financial debts in a business and personal debts go hand in hand when a business owner goes bankrupt. There are some essential implications for directors of companies when it comes to Bankruptcy in Brisbane: A bankrupt can not be a director of a company, so if you have a pty ltd company you definitely will need to retire as a director soon after you're bankrupt.

A restriction that applies when you are actually bankrupt as a business owner is that you can be in your very own business as a sole trader only. Generally there are things you have to make known as an aspect of that but in essence you can still run your company. For some business owners, bankruptcy impacts their ability to run the business because of the licensing issues. For example, 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 ideal questions when it concerns licenses and Bankruptcy in Brisbaane.

On the other hand if your business is not impacted directly by such issues, then you'll need 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 stop what is called phoenix companies growing out of the ashes of an old company.

Having said that, it's just a matter of consulting with the suitable people about Bankruptcy. Here in this circumstance you may believe you need a liquidator for your business, and you might be right, but keep that in mind every liquidator is distinct and have their own motives. Liquidators profit from your liquidation - heaps of money - so what advice do you think you will get?

When it comes to Bankruptcy, I think that giving generic advice in this area is potentially dangerous as it can have very severe implications for directors and business owners. This is since it is one of those cases where what the right guidance for one business owner is the inappropriate advice for the other. There are some basics however, that you may benefit from. There is no restriction to the size of the business you run while you are bankrupt. You can employ staff. You can continue to deal with your distributors under certain conditions, the main one being you will need to meet the payment terms agreed upon.

So when it comes to Bankruptcy, don't get extremely worried about what you can and can't do as a business owner, just get the right advice ... If you need to learn more about what to do, where to turn and what questions to ask about Bankruptcy, then feel free to contact Bankruptcy Experts Brisbane on 1300 795 575, or visit our website:.bankruptcyexpertsBrisbane.com.au.

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

When it comes to Bankruptcy Brisbane, usually people aren't aware that there can be both voluntary, and involuntary bankruptcy - both of these have unique approaches and guidelines.

Involuntary bankruptcy arises when someone you owe money to involves the court to declare you bankrupt. Usually 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 issue a sequestration order that declares you bankrupt. A trustee is assigned, and then you have 14 days to get the documentation in and then you are bankrupt.

You can contest a bankruptcy notice by going to court 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 very same way.

However, when it comes to Bankruptcy for this, the stress and anxiety, torment and fear that accompanies this process is incredible. If you think you are prone to be made bankrupt by someone, get some help and act on that advice. Generally I've found it's always more effective to know what you can and can't do before you have a person bankrupt you. Once you are bankrupt, it's generally too late.

Voluntary Bankruptcy

Alternatively, when it comes to Bankruptcy, sometimes there are times that it is the best option. So you may need to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the same for everyone of course, but generally I find that one way you could work it out is to figure out just how long it will take you to pay all of your debts - if its longer than 3 years (the period you are declared bankrupt), then this may help 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 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 forget to pay your $30 phone bill for 6 months more, it's very likely the phone company will default your credit file. That default will remain on your file for 5 years, so for $30 you can have your credit file very seriously damaged for that period of time - and all of this will impact how you need to approach Bankruptcy.

In many ways, the ease with which companies/credit providers can default your credit file is not fair. The punishment doesn't seem to match the crime in my book. So if you already have defaults on your credit report for 5 years, keep 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 aspect 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 pay back the money and still have it on your file for 7 years.

Bankruptcy

I have stated 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 go over their financial situation and Bankruptcy. The other side of crime and punishment equation is bankruptcy, and in this specific 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 good.

I don't pretend to know why that is but a couple of hundred years ago debtors went to prison. Nowadays I suppose the government believes 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 in turn costs the taxpayer anyway.

Bankruptcy wipes all 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 actually 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 readily available options. When getting some advice, always remember that there are always options when it concerns Bankruptcy in Brisbane, so do some investigation, and Good luck!

If you wish to find out more about exactly what to do, where to turn and what questions to ask about Bankruptcy, then don't hesitate to contact Bankruptcy Advice Brisbane on 1300 879 867, or visit our website:bankruptcy-advice.com.au/Brisbane .

Bankruptcy in Brisbane - Will my income be altered if I go bankrupt?

Bankruptcy Brisbane is a intricate process, and you need to make sure you get the right recommendations. And when it comes to your income being affected, the answer to the question is maybe. The first thing you need to know about going bankrupt is there is no limit on how much you can earn. However, I will point out that your income is a considerable consideration when working through when it comes to Bankruptcy.

The first thing you need to know about this area of Bankruptcy is the amount 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 each year. A dependant is someone who lives with you and earns less than $3,124 per year (regardless of their age).

You can apply for a hardship variation that increases the threshold amount, if you have costs in Brisbane like medical, child care, considerable travel to and from work, or a situation where your spouse used to work but is not able to add to the household income.

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

There are more issues encompassing income and what is or isn't regarded as income - if you're uncertain, it's recommended to get experienced advice. The reason you need to consider your income as a part of the Big 5 questions here is that bankruptcy is in some instances not an economically practical option.

If one of your creditors is the ATO (for unpaid taxes), then your tax refund may 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 so long as that doesn't take you over your threshold income caps.

If you believe that when it comes to Bankruptcy, your situation is more complicated, then please get qualified advice in Brisbane. I may sound like a broken record, but remember that it's always a good idea to work through these options before declaring bankruptcy, since once you have filed the paperwork it's too late to change your mind.

If you intend to learn more about what to do, where to turn and what problems to ask about Bankruptcy, then don't hesitate to contact Bankruptcy Advice Brisbane on 1300 879 867, or visit our website:bankruptcy-advice.com.au/Brisbane .