logo
spacer
spacer

 eWombat Search 
>
spacer spacer spacer
Latest Accounting News
Hot Issues
Business confidence hits 5-month high: NAB
Caution advised on best interests duty with cryptocurrencies
$20,000 asset write-off renewed for another financial year.
SMSF compliance traps with bitcoin
Where Australia is at. Our leading indicators.
Foreign resident CGT withholding: early recognition of tax credit
ATO set to doorknock as 60% of cash-heavy businesses caught
New downsizing cap available
Capital Gains and Renounceable Rights
Treasury finds Australia 'increasingly uncompetitive' as US moves on tax plans
Australia's vital statistics
Our Advent calendar for 2017
SMSFs warned on ‘ticking time bomb’ with outdated deeds
Taxation ruling on commercial website deductibility
68% of SMEs ‘significantly stressed,’ 85% rely on accountants
Statutory wills are underutilised in estate planning
Small business slips on lodgement deadlines
Articles archive
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 1 of 2015
Articles
ATO states estimates are acceptable
Hockey considers super access for first time home buyers
Reportable Fringe Benefit Amount - Employer Reporting
Simple Mistake on Share Transfer
ATO highlights billions in forgotten super
In a bankruptcy what does a trustee do?
Bankruptcies, what are they?
SMSF trustees unprepared for new collectibles rules
We wish all our clients a Merry Christmas, a Happy New Year and a restful holiday
Employee Christmas Parties and Gifts – Any FBT?
Breaking down the latest ATO determination on TRIS
Bankruptcies, what are they?

 

In each of 2013 and 2014 financial years approximately 20,000 Australians declared themselves bankrupt.



       


A declaration of bankruptcy is one of several options available to persons who may be insolvent and provides a finalisation or moratorium to all of their creditors.  It may be initiated by either the debtor themselves or a creditors petition via the courts.


The affairs of the debtor are transferred to a specialist accountant who then stands in the shoes of the debtor and then acts with all the authority in place of the debtor.


It provides an elimination of all obligations and disposal of most property.  All debts e.g. tax debts, credit cards, telephone accounts, which are unsecured, will be eliminated, whilst secured debts e.g. home loan, business loan will be complicated until enforcement of security determines what equity (if any) exists.


It may also cause problems for anyone who has guaranteed an account e.g. a parent who has guaranteed a phone plan for a minor.


The trustee ends the bankruptcy by making a distribution to creditors to finalise their entitlements.  The debtor is then, after the period of bankruptcy (typically five years) able to start their financial arrangements again.  Obtaining credit and starting a new business will certainly not be as easy with bad credit ratings and financiers reluctant to advance other than a minimum level of credit.  Previously simple tasks e.g. renting, phone and utilities will be challenging.




14th-February-2015