If you've run into financial trouble, then you may be facing the bankruptcy process. While it can seem difficult to overcome, understanding how it works and the options available to you are excellent first steps.
In many cases, getting a head start with the process means you'll be able to more quickly recover from your money problems and get back on your feet.
Understanding how bankruptcy works
Bankruptcy is essentially the process whereby you give up your assets and control of your personal finances in exchange for protection from your creditors. The process can come about either as a court order or by an agreement, and you will usually do so to avoid legal action.
It only applies to individuals, and generally lasts for a total of three years. Given the time span involved, it's important to think seriously about your options before proceeding. When bankruptcy cases go ahead, they'll be heard by either the Federal Court or the Federal Circuit Court, but the procedures are the same across both.
Other options include personal insolvency agreements (also known as PIAs), that allow people to pay off debts in a way that is appropriate to their financial situation. In many ways it is similar to a debt agreement, but assets, income and debt aren't under a limit.
Again, this is where it's a good idea to speak to a professional organisation, as you could pay more under a PIA than you would if you agreed to bankruptcy. You must be insolvent before proposing a PIA.
For companies, the process is called liquidation, and is put in place under similar circumstances. For example, if a company is unable to pay debts, it stops operating and company assets are then sold to pay off the debts. If you feel that liquidation is necessary, it could be worth seeking help.
Is help available?
It's important to be aware that while it may sound ominous, bankruptcy isn't the end. You may find that in many cases, there are options available before declaring bankruptcy. This is why it's a good idea to speak to an organisation like Corporate Lifeline, who can guide you through the process and provide you with the options available and the difference processes available.
If you'd like to learn more about how the bankruptcy process applies to you, and insolvency options for businesses, don't hesitate to reach to out Corporate Lifeline for assistance.