What are the Consequences of Bankruptcy in Perth?

A legal complication that arises when an individual is unable to pay their debts is termed bankruptcy. When one becomes bankrupt, they are assigned a trustee responsible for overseeing their financial matters.

While there is mostly evidence of involuntary bankruptcy, anyone can enter into voluntary bankruptcy as well.

With efficient bankruptcy lawyers in Perth, you can get effective solutions for paying your debts, get assistance from someone who will investigate your financial affairs, and deal with the necessary process.

Consequences of Bankruptcy

While it has consequences, one can volunteer to become bankrupt when they can no longer pay their debts. This brings the idea of voluntary bankruptcy.

If you plan to apply for bankruptcy, you must be aware of the serious consequences. Get in touch with experienced and efficient corporate insolvency lawyers for legal advice.

• Administered by a trustee

While applying for bankruptcy, you will be asked to choose a trustee. The trustee will have the power to manage your bankruptcy.

The trustee you choose will be able to recover assets you own on your behalf before and during the bankruptcy. They can also hold power on some assets you have gathered before or during the time.

Choosing a trustee carefully is recommended due to their immense power over your financial matters. They can recover transferred assets within five years before your bankruptcy period starts. They can also sell the properties you obtained before or during bankruptcy.

Your trustee’s responsibilities often remain intact even after your bankruptcy has ended.

• Not having full freedom from debts

Entering bankruptcy does not mean full freedom from debts. While unsecured debts are mostly covered in bankruptcy, all of your debts will not be covered. However, you do not have to pay for unsecured debts.

Your trustee will take over the debts that are yet to be paid. They can also sell some of your assets to help pay your debts. Learn more about how bankruptcy affects other kinds of debt like secured, joint, overseas, and company debts.

• Affects your income and other financial aspects

While your trustee has power over your financial dealings and assets, you must also pay them. However, paying the trustee is only needed if your income exceeds a certain amount.

Bankruptcy also brings restrictions to your employment and other sites of income. While it does not prohibit you from keeping a job, there are certain limitations.

There will be restrictions in operating as a sole trader in your business. As a bankrupt person during this period, you will be prohibited from managing a trust account, being a company director, and holding some public positions. Some trades can also be out of bounds for you in this situation.

• Affects your ability to travel

During bankruptcy, you cannot freely travel overseas. If you are compelled to travel, you must request permission and written consent. Without written consent, your overseas travel can violate the law under the Bankruptcy Act of 1966.

As an Australian citizen, the bankrupt must get legal written consent from their trustee before traveling. Otherwise, it won’t be possible for you to travel.

• Affects your ability to acquire future credit

You must inform your credit provider to apply for credit when you enter bankruptcy. Information about your bankruptcy is thus kept for 5 years starting from the beginning date. In some cases, the record is also kept for 2 years from the date when your bankruptcy ends.

Your name will also be included in the National Personal Insolvency Index (NPII), a public register, along with your personal information, such as name, contact details, and date of birth. These factors can definitely affect your chances of getting future credit.

Conclusion

When an individual or a business is unable to pay their debts, they can be declared bankrupt. In many cases, one can also volunteer themselves as a bankrupt. While having your unsecured debts covered seems convenient, it has significant consequences.

Bankruptcy is a complex legal process that prevents you from many financial dealings, sources of income, and travel. Therefore, it is suggested that you seek guidance from the best corporate lawyers in WA, who will inform you about the nuances of bankruptcy.