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Deep in debt? We’re here to help. 

Personal insolvency and bankruptcy

If you’re on the verge of having nothing

Sinking in a tonne of debt turns the joys of life into a heavy burden.

A lot of people who approach MyBudget are so deep in debt that they can see no way out except personal insolvency or bankruptcy. They’re usually so stressed and worried that they can’t imagine any other options.

All they know is they want the worry to end. They want the calls and letters from debt collectors to stop. They want to sleep at night. They want to start enjoying life again.

There can be significant consequences that should be taken into account when filing for personal insolvency or bankruptcy. This could include five years of limited or costly access to sources of credit. It is a serious decision and should only be considered with appropriate counsel.

At MyBudget, we recognise that bankruptcy and formal debt agreements do have their place for some people. However, we also understand the implications of going bankrupt.

Understanding personal insolvency and bankruptcy

It’s important to have a top-level understanding of these legal terms

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    Personal insolvency

    Personal insolvency is a legal term that describes your financial position. If you’re unable to pay debts when they’re due, you’re insolvent.
     
    Arranging a debt agreement or declaring bankruptcy is an act of insolvency.

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    Formal debt agreement

    A formal debt agreement is a legally binding arrangement. It lets you pay your creditors a sum you can afford.
     
    A debt agreement is also referred to as a Part 9 or Part IX debt agreement. It falls under Bankruptcy Act 1966.

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    Bankruptcy

    To declare yourself bankrupt is to declare to your creditors that you are no longer able to afford the repayments that you owe them.
     
    Successfully filing for bankruptcy releases you from most of your debts.

Insolvency is nothing to be embarrassed about

It takes a lot to feel like a formal debt agreement or declaration of bankruptcy is your only way out, and it’s not always overspending or poor money management.

We understand that in life, we can get unlucky. Sometimes, life’s circumstances are out of your control.

There’s no need to feel embarrassed or ashamed.

You may have:

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    Been injured or become severely
    ill and as a result unable to earn

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    Lost your job unexpectedly and
    unable to get another quickly

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    Gone through a
    relationship breakdown

The consequences of debt agreements and bankruptcy

If you’re drowning in debt, arranging a debt agreement or declaring bankruptcy may be tempting. But both these acts of insolvency have high-impact consequences.

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    Bankruptcy

    • If you declare yourself bankrupt, a registered trustee appointed to you can value and sell your belongings to pay back your creditors.
    • Sometimes, the trustee can even take control of a portion of your salary.
    • Your name will be listed on the National Personal Insolvency Index permanently.
    • The NPII’s listing is publicly available.
    • Your insolvent status will appear on your credit file for five years, limiting your access to credit during this time.
    • Even after the bankruptcy is over, borrowing anything may still be a challenge.
    • Declaring bankruptcy may also restrict you from working in certain professions, running businesses, or travelling overseas.
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    Formal Debt Agreement

    • A formal debt agreement will appear on your credit file for five years.
    • Your name will be listed on the National Personal Insolvency Index (NPII) for at least five years.
    • The NPII’s listing is publicly available.
    • Your access to credible sources of credit will be severely limited.

What to do instead of arranging a debt agreement or filing for bankruptcy

At MyBudget, we understand each and every person’s financial situation is unique. This is why our goal is to help you create a financial solution that works just for you.
 
All you need to do is meet with us. A consultation session with us is completely free of charge.
 

In our session, we’ll thoroughly analyse:

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    Your bills

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    Your loans

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    Your expenses

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    Your current debts

Through this analysis, we’ll help you develop an accurate understanding of your financial situation.

From there, we’ll help you explore your options and work with you to develop an ongoing financial plan to get you back on track.

We can help you develop a strategy that combines repayment negotiation with a budget plan to pay off your debts.

As you already know, arranging debt agreements and filing for bankruptcy have terrible consequences. We want to help you find the right alternatives.

What if I really do need a debt agreement or to file for bankruptcy?

Depending on your financial situation, arranging a debt agreement or even filing for bankruptcy may be unavoidable.
 
If we’ve gone through a complete analysis of your financials and come to this conclusion, we can help administer your insolvency.

In fact, we can handle everything, if you choose.

You'll be able to:

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    Stress less

    You can relax. We'll administer your insolvency and handle all the paperwork, so you don’t have to.

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    Sleep better

    Stressing less means you can sleep more peacefully at night. We'll solve this together.

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    Escape debt collectors

    Insolvency solutions should see the end of constant calls and door-knocks from money chasers.

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    Look to a new beginning

    Bankruptcy isn’t the end. The road ahead may be tough, but it will be a new beginning.

Frequently Asked Questions

In Australia, bankruptcy lasts for three years.
 
The bankruptcy can be extended for five years more if your appointed trustee lodges an objection to your discharge.

Remember, bankruptcy has high-impact, negative consequences and should be your last resort.

In Australia, personal insolvency is overseen by the federal government through the Australian Financial Security Authority (AFSA).
 
The AFSA registers all debt agreements and bankruptcies.

A Part 9 or Part IX debt agreement is the same as a formal debt agreement.
 
Debt agreements are different to bankruptcy because they let you offer a reduced settlement to your creditors in the form of a repayment schedule.
 
A formal debt agreement may let you keep higher value assets, like your house.

Our clients tell their stories