Bankruptcy & Coronavirus
The whole coronavirus situation has everyone turned around. Things are complicated and getting your hands on the right information is becoming more difficult. Bankruptcy applications are already on the rise.
The prediction is that once the Australian Government pulls back on the current stimulus of job seeker / job keeper and the like, personal insolvencies are set to rise dramatically.
The uncertainty of the times stops many from making decisions that can help their situation. Also, another reason ppl drag out not looking at insolvency options is personal pride. If you are one of these ppl that feels like a failure for looking at these options. I can guarantee you that you are not alone.
The Australian Financial Security Authority have made some changes due to the coronavirus situation; we will explain what they are and how they might affect you. One thing that is clear is that many of these changes don’t really change your overall situation.
The timeframe for Australia’s economy to bounce back after the coronavirus is estimated to take anywhere from 12 – 36 months. AMP have anticipated a best case 10% drop in housing prices but more likely a 20% plus drop. What has been propping the market up is government spending on job seeker / job keeper and mortgage freezes. This cannot and will not last forever and when it has stopped the piper will be paid…
Now, the reason I went off on a tangent early is to highlight the opportunity here for people who can get a fresh start through bankruptcy. If it will take 2-3 years for the Australian economy to bounce back is it better to declare bankruptcy now? Or drag yourself out 3 years and then declare…? This question is something only you can answer. However, the overall duration of bankruptcy is 3 yrs & 1 day. So, if you decide now you can still rely on the govt stimulus to support your finances in the early stages if you don’t have a job, while being released of your debts.
There has been some minor changes to the process and obligations of bankruptcy due to the virus. One of the main changes has been with the temporary debt protection and the duration of time this lasts. Temporary Debt Protection is a process you can use to temporarily place your debts on hold. This stops any debt collection action, garnishee of wages and court action against you. Note it does not stop any secured creditors from repossessions to recoup their debts.
At The Bankruptcy Team we use the Temporary Debt Protection in conjunction with Personal Insolvency so that you reap the benefits of not getting calls and harassed about your debts sooner. Temporary Debt Protection (TDP) lasts for 6 months. The previous timeframe was for 4 weeks, so this has greatly extended the duration.
Another changes has been in relation to the debt threshold required for a creditor to force you into bankruptcy. The previous limit was $5,000 which has now increased to $20,000. Also the timeframe for you to respond to being forced into bankruptcy has increased from 21 days to 6 months. That means the creditor will have to wait until the full six month period has passed before they can commence bankruptcy proceedings.
If you have been considering bankruptcy complete our FREE ONLINE BANKRUPTCY EVALUATION NOW and find out your bankruptcy suitability.
If you are or have been struggling with your debts and it is causing you financial stress, It is important that you act quickly. The best thing you can do is be informed about the process and how it affects your current situation. Find out if bankruptcy is suitable.