Bankruptcy in Melbourne - Changes that help Small Business and Entrepreneurs

Do you know how much Bankruptcy Melbourne is changing? The Australian Government at the end of 2015 moved for some radical changes to the Bankruptcy Laws in Australia. One of the most significant of these is the length of time that a person is bankrupt for. Now, there is a minimum amount of time that you must remain bankrupt, however, this 3 year period may in fact be reduced down to just 12 months. So if you are asking about Bankruptcy, this news may be somewhat important to you.

Mark Carnegie in the Financial Review on the 7th December 2015 recommended that "the proposed changes to ease the burden of bankruptcy laws didn't go far enough and the government should adopt US-style laws to protect the family home".

These adjustments to the issue of Bankruptcy will take 18 months to implement. Mr Carnegie, went on to say in the Financial Review that protecting family assets was important because "banks just terrorise small business and the mental health consequences to society are enormous".

The problem is Australia's bankruptcy laws deterred investors from supporting start-ups, and therefore mentoring had been "driven out of the system".

"They naturally find it very intimidating themselves personally and with their assets at risk in a risky early-stage deal, but with their own money in the deal and a lightened-up provision I think we 'd probably see more willingness. It could be more important than the money."

Fraudulent Behavior

The argument about this Bankruptcy issue in Melbourne that some make is that this change will only push fraudulent behavior opening pandora's box in a manner of speaking for the unscrupulous to misuse of the bankruptcy system. We have looked at the minimum, but on the other side of the issue, The government is not proposing to change the maximum term of 8 years if it deems a bankrupt has performed in an unethical or fraudulent way, and there are no suggestions to change the repercussions of misrepresenting yourself or financial situation when filing for bankruptcy in Australia.

As a bankruptcy professional in Melbourne, I have a fair share of practical experience when it comes to Bankruptcy. And having dealt with thousands of bankruptcy cases in Melbourne I have never come across someone abusing the system or acting in a careless way as to exploit the insolvency laws in Australia. When it comes to Bankruptcy, every week I help a small business owner or entrepreneur look at the very challenging task of bankruptcy, not once have I thought they are happy about it. The average small business owner or entrepreneur in Melbourne does not start out taking enormous financial risks with the intention to fail. The media really loves citing the apparent abuse that will be rampant if these changes occur, what a joke!

A Win for Small Business

These proposed changes will be good for often the most effective and brightest in Melbourne not get tossed out of the game financially for financial decisions often outside of their control. Most small business owners I help with Bankruptcy, are hardworking, tax paying, managers keeping this country going.

There certainly is a fine line with just what the government is trying to do here, since they are attempting to balance helping people who have made decisions out of their control, and dissuading people from making problems that land them in trouble and as a result an issue of Bankruptcy. However you also don't want to wipe out the experience and knowledge that business owners have. You definitely don't want to smash people simply because they have had a sincere failure in a large or small start-up enterprise that has not panned out.

At the big end of town large established companies have long been criticised for their failure to innovate - lets face it they would be more likely to do so if the risks of insolvency were lowered because directors are distressed they'll be personally responsible in an insolvency arrangement if the new project doesn't work out.

The government's suggested 'safe haven' modifications for directors of companies will enable Australia to more fully explore and innovate, which will make big changes for Bankruptcy. I cannot imagine, that these differences will be harmful to Australia's economy, indeed these bankruptcy laws will save the tax payer in all areas of health - Especially in the mental health industry because the emotional cost of bankruptcy is enormous. When it comes to Bankruptcy in Melbourne not a day goes by where I don't find out the tragic experiences of relationship failures, thoughts of suicide and the list continues.

Bankruptcy helps save lives, and it could save yours. If you really need some assistance with your debts in Melbourne or are just considering Bankruptcy, don't hesitate to phone us here at Bankruptcy Melbourne on 1300 795 575, or visit our website: bankruptcymelbourne.com.

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

When it comes to Bankruptcy Melbourne, quite often people aren't aware that there are both voluntary, and involuntary bankruptcy - each have different methods and guidelines.

Involuntary bankruptcy occurs when a person you owe money to applies to the court to declare you bankrupt. Usually when you get one of those notices, you have normally 21 days to pay all the debt. If you don't, then the creditor goes back to the court and requests the court to issue a sequestration order that declares you bankrupt. A trustee is selected, and then you have 14 days to get the paperwork in and then you are bankrupt.

You can contest a bankruptcy notice by going to court shortly after the 21 days have expired and put your case forward, to prevent it going to the next level. Other than the way you became bankrupt there is in reality no difference between Involuntary Bankruptcy and or Voluntary Bankruptcy - once you are declared bankrupt, they're overseen to in the same way.

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

Voluntary Bankruptcy

However, when it comes to Bankruptcy, sometimes there are moments that it is the most ideal option. So you may need to ask yourself, 'when should I consider voluntary Bankruptcy?'.

This question is not the same for every person of course, but usually 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 serve to 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 off 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 overlook to pay your $30 phone bill for 6 months more, it's very likely the phone service will default your credit file. That default will sit on your file for 5 years, so for $30 you can have your credit file seriously damaged for that period of time - and all of this will affect 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 amount to the crime in my book. So if you actually have defaults on your credit report for 5 years, remember that bankruptcy is on your credit file for a total 7 years then its rubbed out completely.

So if your credit rating is a big factor in trying to decide whether to take part 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 variation is that with a DA or PIA you pay back the money and nevertheless have it on your file for 7 years.

Bankruptcy

I have talked about 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 over with no strings attached. Compared to countries like the United States, our bankruptcy laws are extremely reasonable.

I don't claim to know why that is but a couple of hundred years ago debtors went to prison. Nowadays I suppose the government finds that 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 every one of your debts including ATO debts with the exception of 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 far more that can be said about 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, remember that there are always possibilities when it relates to Bankruptcy in Melbourne, so do some study, and Good luck!

If you would like to learn more about just what to do, where to turn and what questions to ask about Bankruptcy, then feel free to contact Bankruptcy Melbourne on 1300 795 575, or visit our website: bankruptcymelbourne.com