When you are needing debt help and you search online by googling resolve your debt or how to get out of debt, the information you will get can be confusing. So, I’m going to explain some of the important terms for you.
What is insolvency?
Insolvency is simply a state of being where you cannot afford to pay your debts as and when they fall due.
You are insolvent if you cannot pay your debts on time.
What is bankruptcy?
Going bankrupt, is a legal process for people who are unable to fix their bad debt problem. It is a formal arrangement regulated by the Australian Financial Security Authority or AFSA under the Bankruptcy Act (“Cth”)1966.
What is debt consolidation?
Debt Consolidation in Australia has several meanings.
Debt consolidation can mean a high interest loan where all your debts are rolled into one and you pay that off. It’s really just a debt consolidation loan that puts you into further debt.
Debt consolidation can also mean entering a Part 9 debt agreement which might seem like a good way to resolve your debt but is really just the same as going bankrupt.
What happens when you choose to go bankrupt?
- You lodge a debtor’s petition to go bankrupt
- The bankruptcy will be noted on your credit files for 5 years and you won’t be able to get credit approved for that time (even for a mobile phone)
- Your name will be listed on a public register called the National Personal Insolvency Index for everyone to see
- Your bank accounts will be frozen
- If you are in business, you won’t be able to be a director of your company anymore and any shares that you have in your own company will be taken over by the trustee
- Your trustee in bankruptcy may charge you up to $100,000 in fees which will be taken from anything you currently own outright (the part you own of your house or car or other non-essential possessions)
- You will lose complete control of your finances for the period of the bankruptcy
Are there other ways of going bankrupt?
Yes, by being forced to go bankrupt. This is when you receive a creditors petition and the companies you owe money to force you into bankruptcy.
Another way of going bankrupt is to enter a part 9 debt agreement.
Is there a better way to get debt relief and consolidate your debt?
Yes, there is! A better way to resolve your debt and avoid going bankrupt is to contact Solve My Debt Now.
- Aims to avoid bankruptcy
- Enables you to pay your entire debt down to zero in 3-5 years or less
- Reduces or freezes interest
- Investigates whether your debt is valid
- Reduces or waives your debt
- Does not put a 5-year bankruptcy listing on your credit file
Call our friendly Solve My Debt Now team on 1300 070 672 for confidential debt help to get your life back on track.
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