A licensed insolvency practitioner is someone who holds the necessary qualifications and is registered with the Australian Financial Security Authority (AFSA) and or the Australian Securities and Investments Commission (ASIC).
To be licensed to offer all personal insolvency services you need to be Registered as a Trustee in Bankruptcy with AFSA. To become a Registered Trustee in Bankruptcy you need to hold a university degree in accountancy and be a member of the Institute of Chartered Accountants or CPA Australia. In addition, it is highly desirable that you also be a member of the Insolvency Practitioners Association of Australia. To obtain all of these qualifications it takes many years of study. It takes a minimum of 5 years to obtain these formal qualifications but it can take much longer to become registered as a Trustee in Bankruptcy. Obtaining the formal qualifications is only the first step. Gaining the necessary work experience will take much longer and AFSA conducts lengthy and thorough interviews before they register applicants. AFSA will test the applicant’s knowledge of the Bankruptcy Act very thoroughly, so unless you have many years of experience in administering personal insolvency cases, it is unlikely you will gain registration.
The benefit of dealing with a fully licensed insolvency practitioner is that they are highly experienced professionals and have completed very demanding studies. The other benefit of dealing with a fully licensed insolvency practitioner is that they can offer all personal insolvency services including:

• Debt Agreements
• Personal Insolvency Agreements
• Bankruptcy

When dealing with a fully licensed insolvency practitioner, you can relax knowing that the practitioner won’t be biased towards a particular product as they can legitimately offer all insolvency services. Some companies advertising their services on the internet don’t have fully qualified insolvency practitioners on staff and will instead charge you for doing some preparatory work and will then refer your case onto another company at a later stage. This of course leads to duplication in costs and unnecessary delays.
Here at Debt Free you don’t have to worry about any of that because our CEO is fully licensed insolvency practitioner with both AFSA and ASIC. We offer all personal insolvency services.
We look forward to assisting you with your personal insolvency issues.  Call our friendly personal debt advisors on 1800 462 767.

What is insolvent?

Being insolvent means you cannot pay your debts as and when they fall due. This usually happens when your household expenses consume all of your available income and you don’t have any surplus monies to pay your debts. This situation can only be solved if you have assets which you can sell to pay debts.
If you don’t have any assets to sell and you can’t make any changes to your household budget, then you should start looking for a debt solution as quickly as possible.
The good news is that we can help you find the right solution.

What are the consequences of being insolvent?

If you don’t address your insolvency, you could be made bankrupt  by a creditor if you owe them more than $5,000. Becoming bankrupt will place long lasting restrictions on you.

What options do I have if I am insolvent?

If you are insolvent, it is critical that you get professional advice from a company that is fully licenced and registered for all debt solutions. Here at Debt Free our CEO is a Chartered Accountant and a Registered Trustee in Bankruptcy. This means that we are licenced to handle all personal insolvency administrations in house. We can handle your case from the beginning to the end regardless of what solution you need. Listed below are the services you should consider if you are insolvent:

• Debt Agreement
• Personal Insolvency Agreement
• Bankruptcy

 
Call us now on 1800 462 767 if you wish to discuss your personal insolvency issues.

Whilst a Debt Agreement is an alternative to bankruptcy and has many advantages compared to bankruptcy you need to be aware that they don’t deal with all debts.
A Debt Agreement will only allow you to settle certain unsecured debts. So if you have assets which you wish to keep and they are attached to secured loans then these loans will need to be paid in the ordinary course. For example if you have a car or a house which is subject to a secured loan and you wish to retain these assets then you will need to continue to pay these loans. However, one of the major benefits of a Debt Agreement is that as long as you keep up with your secured loan repayments, the underlying asset will be protected from your unsecured creditors.
Click here to read more about the differences between secured and unsecured debts.
So if a Debt Agreement only allows you to settle unsecured debts, which unsecured debts can be included?  In short, only provable debts in bankruptcy can be included. To fully explain what is a provable debt in bankruptcy is beyond the scope of this article, but the most common types of provable debts are listed below:

• Accounting & or legal fees;
• Credit cards or store cards;
• Centrelink debts (unless it was incurred by fraud);
• Overdrawn bank balances (ie overdraft or overdrawn savings account)
• Personal loans, or business loans (if you have personally guaranteed them);
• Trade creditors (if you have personally guaranteed them);
• Medical fees;
• Mortgage insurance premiums;
• Pawn shop & or Pay Day lenders;
• Rent;
• Secured creditor shortfalls;
• Taxes;
• Utilities (like electricity, gas, telephone (including mobile), internet & pay TV).

 
You cannot include non-provable debts in a Debt Agreement. The most common types of non-provable debts are listed below:

• Any amount payable under the proceeds of crime laws;
• Abortive writs, collection agents expenses;
• Centrelink debts incurred by fraud;
• Child support (if the agreement has been registered with the child support agency);
• Council, strata levies & water rates;
• Debts incurred by fraud;
• Penalties and fines imposed by a Court;
• HECS debts;
• Unliquidated damages;
• Student Loans;
• Unenforceable laws.

If you want to discuss in more detail what debts can be included in a Debt Agreement then call our friendly Personal Debt Consultants in our toll free number 1800 462 767.

Secured Loans 

A secured loan is one that is backed by some sort of collateral or asset.  This basically means that the lender will “hold” the collateral (ie the asset) until you pay off the loan.  Whilst the asset is held as collateral or security for the loan, you cannot deal with the asset in any way without the lender’s approval. If for any reason you default on the loan, the lender has the right to take possession of the asset and sell it to repay the debt. This is also known as “foreclosure” or a “mortgagee sale”.  If there is a shortfall after the sale of the asset (ie the asset sold for less than what was owed then the lender can claim the shortfall but this amount will become an unsecured debt).
Typically secured loans attract a lower rate of interest.  That is because the risk involved for the lender is a little less (ie the lender has recourse against an asset in the event that you don’t pay the loan repayments).  The lender will not usually lend 100% of the value of the asset.  For example if you want to buy a house most lenders in the current market will only lend up to say 90% or 95% of the value of the house.  That is because the lender is reducing its risks of incurring a loss in the event of foreclosure.

Unsecured Loans 

An unsecured loan is where no security or collateral is provided for the loan.  The lender is taking the full risk that you will repay the loan on the terms agreed.  If you fail to make the repayments, the lender doesn’t have any asset to sell to recover its debt.  In the event of non-payment the lender may commence formal debt recovery proceedings which may lead to bankruptcy. As a result of the high risks involved, lenders will charge higher rates of interest. For example, a credit card is unsecured and typically attracts a high rate of interest.

What should you do if you can’t afford to repay these debts?

Can’t repay a secured debt – what should I do?

If you can’t afford to repay a secured debt, then you will need to speak to the lender and make arrangements to surrender the asset and allow the lender to sell it or you can seek the lender’s permission and sell the asset yourself. Of course if you sell the asset yourself you will need to remit the proceeds to the lender in repayment of the debt. Remember because the asset is “charged” you cannot sell the asset without the lender’s express permission. If there is a shortfall on the sale of the asset the debt will become unsecured. If you can’t pay the shortfall read below as to what may be your options.

Can’t repay your unsecured debts – what should I do?

If you can’t pay your unsecured debts you should start by seeing if you can reach an informal arrangement with your creditors.  If the informal arrangement isn’t successful or your creditors as a group won’t agree you may then wish to consider a formal arrangement. To understand the difference between a formal and informal arrangements with your creditors click here.
Call us now at 1800 462 767, if you need any help understanding the differences between secured and unsecured debts. Our personal debt advisors  are here to help you now.

Bankruptcy has some harsh consequences which will remain for many years after you have been discharged. Whilst you are bankrupt it may also place restrictions on your lifestyle and employment opportunities. Bankruptcy should not be considered lightly and any decision to file for bankruptcy should be carefully thought through. Please read this article very closely and also consider the alternatives to bankruptcy as they may be less intrusive to your lifestyle.
If you have any questions please call our friendly personal debt advisors on 1800 462 767. Our initial discussion is free of charge.

Bankruptcy Consequences

How long will it last?

Bankruptcy usually only lasts for 3 years, but under certain situations it can be extended out to 5 or 8 years. Click here to learn how it can be extended out to 5 years or 8 years.

Will there be a public record of my bankruptcy?

Yes, your bankruptcy will be recorded for life on the National Personal Insolvency Index which is a database maintained by the federal government agency known as AFSA

Will my credit file be tarnished by bankruptcy?

Yes, your bankruptcy will be recorded on commercial credit reporting databases for 5 years (starting from the date of your bankruptcy).

Bankruptcy Restrictions

Below is a snapshot of the restrictions which you may experience whilst bankrupt:

Surrender your Passport

Your Trustee in Bankruptcy will ask you to surrender your passport.  If you wish to travel overseas for work or pleasure you will need to firstly seek the permission from your trustee.  If you fail to return to Australia (when requested to do so by your Trustee), your bankruptcy will be extended to 8 years.

Yearly assessment of your income 

Your Trustee in Bankruptcy will need to undertake an assessment of your income every year of your bankruptcy.  The purpose of this is to make an assessment as to whether you are liable to pay compulsory income contributions into your bankrupt estate.

Restriction on credit limit

Whilst you are bankrupt you can’t apply for credit more than $5,703 without disclosing to the credit provider that you are bankrupt. Failing to do so can also lead to prosecution.

 Restriction on occupations 

Bankruptcy may restrict your employment opportunities.  Some professions do not allow bankrupts to practice freely without restrictions placed on them.  AFSA has published a list of professions or trades which may be affected by bankruptcy. If you hold professional qualifications or a trade licence you should carefully review this and contact your professional body or licencing body before you file for bankruptcy.

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 462 767.

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 462 767 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 462 767.