A Bankruptcy Trustee can object to your automatic discharge and file an application with AFSA for your Bankruptcy term to be extended from 3 years to 5 years if you trigger any of the following grounds:

• You leave Australia without your Trustee’s permission whilst bankrupt
• You entered into a transaction (prior to bankruptcy) which is later declared void by your trustee (ie you made a preferential payment prior to bankruptcy or you entered into a undervalued transaction prior to bankruptcy)
• You continued to act as a company director whilst bankrupt
• You incurred credit for more than the prescribed amount (currently set at $5,447 as at September 2015)
• you failed to attend an examination or interview as directed by your Trustee (without any reasonable explanation);
• you failed to attend a meeting of your creditors as directed by your Trustee;
• you failed to disclose an asset or a beneficial interest in an asset;

A Bankruptcy Trustee can object to your automatic discharge and file an application with AFSA for it to be extended from 3 years to 8 years if you trigger any of the following grounds:

• you entered into a transaction prior to bankruptcy with the intent to defeat creditors which was declared void by your Trustee;
• you made an excessive payment into your superannuation fund prior to bankruptcy with the intent to defeat creditors;
• you failed to provide a written explanation to your Trustee about your property, income or expected income;
• you intentionally provided false or misleading information to your Trustee;
• you failed to disclose full particulars of income or expected income to your Trustee;
• you failed to pay compulsory income contributions to your Trustee;
• if within 5 years prior to becoming bankrupt,
  1. you spent money but failed to adequately explain (when asked by your Trustee) how and for what purpose the money was spent;
  2. you sold property but failed to adequately explain (when asked by your Trustee) why no money was received for the sale or what you did with the money;
• whilst bankrupt you left Australia and failed to return to Australia when requested to do so by your Trustee;
• whilst bankrupt you refused or failed to sign a document after your Trustee requested you to sign the document;
• you intentionally failed to disclose to your Trustee a beneficial interest in an asset.

Many people feel stressed by the amount of debt they have. Times are becoming tough and people are struggling to pay their bills. It’s not uncommon for people to get into too debt and then don’t know how to get out of it. Debt problems can quickly spiral out of control in periods of unemployment or poor health.
It is important that you regularly monitor your debt levels so your situation doesn’t get worse.
If you are experiencing stress from debt, you should contact a personal debt advisor  as soon as possible. Do not allow the stress from debt to cause health issues.

Explore the Options to stop the stress

There are plenty of options available to help solve debt problems.
The first step is to study our tips on how to reduce your credit card debt.
If those tips didn’t help or you feel your situation is worsening then you may wish to consider implementing a repayment plan with your creditors. It is best that you first try and negotiate an informal repayment plan with your creditors.
If your informal arrangement wasn’t successful or some creditors didn’t agree then you may wish to consider a formal arrangement with creditors.
The last resort is of course bankruptcy. But before you rush into bankruptcy make sure you fully understand the restrictions of bankruptcy.
Whatever the financial situation you find yourself in, it is important to remember that there are solutions to your debt problems and professional help is only a phone call away. If you are stressed by debt, call our highly trained debt advisors today to arrange an obligation free debt assessment. Call now on 1800 676 598.

If you have been looking at potential solutions to help solve your debt problems, you may have come across the terms, Debt Agreement, and Personal Insolvency Agreement. Whilst there is plenty of information about both of these debt solutions, callers still get confused about the differences between them.
This page will hopefully clear that up.
Firstly the basic principles are the same, as they are both formal creditor arrangements and are regulated by the Bankruptcy Act. Whilst the arrangements are regulated by the Bankruptcy Act, they should not be confused with Bankruptcy. They are both formal agreements entered into with your creditors to settle your debts over a period of time. The decision as to which agreement to enter into comes down to your current debt levels, current income levels and the equity you have in your assets. The current amounts are as follows:

 
These levels are also regulated by the Government and are adjusted every six months (in line with CPI movements).
If your finances are under these amounts, you are free to choose either agreement, but a Debt Agreement would make more sense because the set up fees are less and you can usually set one up quicker. If you exceed these amounts, you become ineligible for a Debt Agreement and can only then consider a Personal Insolvency Agreement.
However, if you are a couple (ie husband & wife) and want to settle your household debts in the one agreement then you are probably best to propose a joint Personal Insolvency Agreement. Joint Debt Agreements are not possible.
Other differences between the two options are best explained in the table below:
 

 
If you have debt problems which you would like assistance with solving, then contact Debt Free. We are the experts in the field of Debt Agreements and Personal Insolvency Agreements. We also offer a free assessment for anyone who would like to see if they are eligible for a Debt Agreement or a Personal Insolvency Agreement.
Call us today on 1800 676 598 to arrange a free debt assessment.

 
If you have been searching for a debt repayment solution, you have probably heard of informal and formal creditor arrangements. Before you enter into any arrangement with your creditors (whether it be informal or formal) you need to understand the differences between the two (2) options.
To help explain the differences we provide the following information in a table format:

 
If any of the above is not clear, please call our friendly and professional debt consultants on our toll free advice line 1800 676 598.

The combination of the economic downturn, resulting in smaller pay checks and higher rates of unemployment, and the previous decade’s worth of easy access to credit, has left many Australians experiencing the overwhelming stress of unmanageable debt. Many people choose to suffer in silence because they are embarrassed, but there is no shame in asking for help when it is needed. The fact is that there are an increasing number of people in exactly the same position as you, so you really have nothing to be ashamed about.
The daily anxiety of dealing with debt can be immobilising, but ignoring the debt in the hope that it will disappear on its own is a dangerous approach. If you are a victim of debt, struggling to make ends meet month after month, you should consult a professional personal debt advisor, who can not only help you recover from debt, but also work with you to prevent future recurrences.
With their team of highly trained personal debt advisors, Debt Free has helped many Australians resolve their personal debt problems in order to regain financial freedom and peace of mind. Debt Free’s team has years of experience in personal insolvency matters. Our advisors are focused on helping each individual work out a plan to deal with debt, not to intimidate or pass judgement on the circumstances that led to the current situation. The team at Debt Free has a thorough understanding of all the Australian debt solutions and will only recommend the solution that suits your needs. Debt Free is fully licensed and is authorised to offer all Australians in debt formal solutions . Many other companies promoting themselves on the internet are only licensed to offer one product which may not be suitable for you.
Our personal debt advisors will also carefully explain the advantages and disadvantages of the different solutions so you will be fully informed to make the right decision.
Call Debt Free now to speak with our friendly and professional debt advisors. You have nothing to lose and the call won’t cost you a cent if you dial our toll free line on 1800 676 598.

The Australian Government introduced legislation to help Australians get out of debt with a formal creditor arrangement. The legislation is contained within Part IX and Part X of the Bankruptcy Act.
The legislation was first introduced in 1966 under Part X of the Bankruptcy Act. As the law stood in 1966 there were three (3) individual arrangements to choose from being:

• deeds of assignment,
• deeds of arrangement; and
• compositions.

These arrangements were unnecessarily complicated and expensive to set-up so the law was streamlined and simplified in 2004. The three (3) arrangements (as listed above) were replaced in 2004 with a more simplified process known as “Personal Insolvency Agreements“.
After introducing the Part X legislation in 1966, the Australian Government realised that the three (3) individual arrangements under Part X of the Bankruptcy Act were expensive and complicated to set up (as they required the services of a fully licenced and registered Trustee in Bankruptcy), so in an effort to make formal creditor arrangements more affordable for lower income earners (with lower debt levels), the Government introduced Part IX of the Bankruptcy Act. The new creditor arrangement for low income earners (with lower debt levels) was legislated in 1996.  The government named these as Debt Agreements.
Choosing which agreement to enter into will depend on your available assets, income and unsecured debt levels as explained below:

 
Click here to learn more about the differences between a Debt Agreement & a Personal Insolvency Agreement.
If you are in need of advice on a formal creditor arrangement to help you get out of debt, then call today and speak to a personal debt consultant on 1800 676 598.

If you are unable to repay your debts on time, a Debt Agreement could be a positive step towards becoming debt free. Unfortunately, there are some downsides and for that reason, you need to carefully review the consequences of entering into a Debt Agreement before proceeding.
So you are presented with a balanced view, we list the advantages and disadvantages of entering into a Debt Agreement.

Advantages:

• Any current or pending legal action to recover your debts will be suspended once your proposal is lodged and accepted for processing by AFSA. If your Debt Agreement is subsequently accepted by creditors, the legal action will be cancelled.
• Secured creditors will not be affected, so you will be able to keep your financed assets (like your car and house) as long as you keep these payments up to date.
• There are less restrictions placed on you (compared to bankruptcy) , so you will be free to travel overseas.
• Your repayments will be based on what you can afford and not based on what your creditors may be demanding. The repayments will be affordable and flexible so you will be able to meet your existing financial commitments (i.e. car leases and house mortgages). You will benefit from one regular repayment, which will cover all creditors and this payment will be matched to your payroll cycle (i.e. if you get paid weekly we will make the repayments weekly).

Disadvantages:

• Your personal details and information will be recorded on the National Personal Insolvency Index. AFSA the government agency who manages the NPII database shares that information with the credit reporting agencies.
• The fact that you have entered into a formal arrangement with your creditors will be recorded on commercial credit reporting databases for a minimum of 5 years (unless if the agreement runs longer than 5 years) (this time period will run from the time that you enter into such an arrangement). After a minimum of 5 years (unless if the agreement runs longer than 5 years),  the listing will be removed from your credit file and will not show up any searches (unless people search the NPII directly which is a separate government database). The most common question people ask is:

“Can I get a loan after my debt agreement is completed?”

Given most Debt Agreements run for between 3 to 5 years there will be a short period of time after your agreement where it may be a little more difficult than usual to get credit. Many clients we have helped have been able to get new credit after successfully completing their debt agreement but unfortunately it will be up the financial institution at the time to assess your application.
If you are having a hard time managing your unsecured debt and you are in true need, the advantages of a Debt Agreement may outweigh the disadvantages.  The most important thing is that you have been made aware of the disadvantages and you have carefully considered these consequences.
If you are thinking about a Debt Agreement, call us today and speak to our friendly but very professional debt consultants. Call now on our toll free advice line 1800 676 598

How do I escape the cycle of credit card debt and become debt free

Credit card debt can become financially crippling if you only pay the minimum amount due each month and continue to incur more debt. Australians are paying record high interest rates as the large commercial banks have largely failed to pass on the interest savings following the cuts from the Reserve Bank in 2012 and 2013.
The average interest rate for credit cards currently stands at approximately 17% (according to RateCity as at May 2013 and data published by the Australian Securities and Investments Commission estimates that the average credit card debt (per card holder) is currently $4,700 and that debt attracts interest of approximately $807 per annum. It is alarming to learn that if you have a credit card debt of $2,500 and only pay the minimum balance each month, it will take 15 years to repay the debt. (source)
If you feel trapped by credit card debt and want to escape the cycle of debt, read below to learn how you might consider going about this.

Consolidate your credit cards

Consolidating your existing credit cards is a great way to reduce the interest bill if you can find a loan which attracts a lower rate of interest. If you have a good credit history and have a stable income you should be able to find a personal loan which attracts less interest than a credit card.  If successful you will be able to roll all of your credit card debt into a personal loan (these are marketed as debt consolidation loans). If you own a house you may be able to redraw funds from your mortgage facility to pay off your credit cards. Most mortgages attract a lower rate of interest compared to credit cards.
For people with a poor credit history, it can often be far more difficult to get a debt consolidation loan or to refinance credit card debt. People with a poor credit history may wish to consider a formal debt solution.

Negotiate an informal arrangement

If you have multiple credit cards, it can become difficult to manage the repayments with different credit card companies. You may try and negotiate an informal arrangement.
The only downsides with an informal arrangement are twofold:

1. You can’t force any one creditor to accept your repayment proposal; and
2. It is unlikely the credit card companies will reduce or freeze the interest (for any longer than say 3 months under a hardship arrangement), so your debts can spiral out of control if the situation isn’t managed carefully.

Consider a formal arrangement

If you have tried an informal arrangement and it failed or you simply can’t afford to repay your debts, you may wish to consider a formal arrangement with your creditors.
A formal arrangement with your creditors like a Debt Agreement or a Personal Insolvency Agreement will have the benefit of freezing the interest on the credit cards and will allow you to make one regular payment towards all credit cards and any other debt you may have. With a formal arrangement you can also select the frequency of your payments to match your payroll cycle (like weekly, fortnightly or monthly).
Click here to learn more about entering into a formal arrangement with your creditors.

If you are facing bankruptcy it may be tempting for some to try and shift assets to keep them away from your creditors.
The Bankruptcy Act has very strict rules to protect creditors from people who shift assets prior to bankruptcy.  We will explore the most common type of transactions which may be clawed back under bankruptcy.

Bankruptcy and Superannuation Contributions

If a person who later becomes bankrupt, transferred an excessive amount of money prior to bankruptcy into their superannuation fund, this amount in certain circumstances, can be clawed back.
By way of an example if someone transferred $10,000 into their superannuation fund, immediately prior to bankruptcy, the Trustee in Bankruptcy could at a later stage “claw” this amount back.
If however, your employer simply paid the regular instalment from your salary into your superannuation fund, then these payments would not become challenged or attacked by a Trustee in Bankruptcy.

Bankruptcy and the Family Home

Where a person transfers their share in the family home to their spouse within 5 years of becoming bankrupt and the consideration paid is less than market value, the transaction can in many circumstances be clawed back. The most common example is where the property is transferred for “love and affection” or for a “nominal amount” like $1.
The “claw back” period can be indefinite if the Trustee in Bankruptcy can prove that the transfer was done to defeat creditors. For example, if someone transferred property for no consideration 10 years prior to becoming bankrupt to avoid and defeat creditors, then the Trustee in Bankruptcy would be entitled to claw it back.
If you are considering bankruptcy, do not shift assets out of the reach of your creditors.  Shifting assets prior to bankruptcy can be traced and clawed back.  If you get caught out your bankruptcy will get extended from the minimum period of 3 years to the maximum period of 8 years.