FAQ

If your Proposal is rejected by your creditors, we will then contact your creditors to find out their reasons for rejecting. If it is established that they are open for a resubmission then we would work with you and the creditors to put forward a resubmission. If the file is rejected the debts with the creditors are revived. This means the creditors can pursue you for payment and any interest accrued. PDS will work with you and assist with your creditors and discuss other options.

In some cases bankruptcy could be the next best option in which case PDS can assist you.

You may continue to pay your unsecured creditors (if you can afford to) until your Debt Agreement has been accepted for processing by AFSA. It is important that you continue to pay your secured creditors such as house mortgage and car loan.

Once your Debt Agreement has been lodged with AFSA and accepted for processing, the creditors may vote to either accept or reject the Debt Agreement Proposal within 35 calendar days.

As described by AFSA on their website.

The Australian Financial Security Authority (AFSA) is the government agency responsible for the administration and regulation of the personal insolvency system, proceeds of crime, trustee services and the administration of the Personal Property Securities Register (PPSR).

Your credit file will be affected which may impact on you being able to obtain credit in the future. Entering into a Debt Agreement will have no additional impact on your credit rating if you have already been subjected to defaults and or judgements.

Both the Debt Agreement proposal and accepted agreement are registered on the (NPII) National Personal Insolvency Index. A creditor can register a default against your name with the credit reporting agency Veda Advantage.

Your Debt Agreement will be listed on your credit report for five years. Once you have completed your obligations under the debt agreement you are eligible to apply for credit, and may be considered at the creditor’s discretion.

No, all creditors do not have to agree. The majority of the dollar amount (more than 50.1%) of those creditors who decide to vote and are entitled to vote have to agree. This is then legally binding on all creditors, and all creditors are legally obligated to participate in the Debt Agreement.

Once accepted by your creditors the Debt Agreement freezes provable unsecured debts. This will allow you to pay back the debts over an extended period of time at an amount that has been calculated that you can afford.

No, a Debt Agreement is an alternative way to deal with your unsecured debts.  Debt Agreements and Bankruptcy are governed by the same federal legislation (the Bankruptcy Act 1966).  Consequences compared to bankruptcy in most cases can be less severe.

A bankruptcy will usually last for three years, unless the Trustee lodges an objection to you being discharged in which case it may be extended for a further five years (these are usually unique circumstances).

When you become bankrupt your name will be entered on the public record (NPII) National Personal Insolvency Index forever. Your name will also appear on Commercial Credit Agencies Reports for five years from the commencement of your bankruptcy. This may limit your ability to obtain credit throughout that period.

• Most legal action against you from unsecured creditors will stop.
• Any garnisheeing of your income or bank account will cease.
• Any recovery action by a sheriff or bailiff will stop.
• Once you have become bankrupt, your unsecured creditors must cease to contact you and they can no longer hassle you for money or threaten to take your assets.
• If an unsecured creditor continues to harass or contact you then you should report this to your trustee.
• You must disclose joint debts, secured debts, unsecured debts and debts you have taken out with family and friends.

If you have a secured debt such as a mortgage or car loan and you wish to retain these assets you will be required to maintain the repayments on these loans. If you cannot afford to keep paying them you can hand these assets back to the creditor. The secured creditor will sell these assets and any shortfall will form part of your bankruptcy as an unsecured debt.

No, when you become bankrupt some of your assets can be retained because they are protected property. Other assets may be recovered by the Trustee

Assets you are generally allowed to keep when you become bankrupt include:

• Tools of trade used to earn an income up to a set limit.
• vehicles (cars and motorbikes) up to a set limit.
• most funds in your superannuation fund.
• life insurance policies.
• compensation for personal injury.
• most of your ordinary household or personal items.
• Centrelink payments are also protected.

It is recommended that before you file for bankruptcy you investigate what assets are protected and those that are not. If you are not sure, call PDS to discuss this matter.

Examples of assets that your Trustee can recover are:

• Property – including houses, apartments and land.
• Vehicles that exceed the threshold.
• Shares.
• Tax refunds from income earned before you became bankrupt.
• Proceeds from a deceased estate, where the person had died before or during your bankruptcy.
• Lottery winnings.

Your share of any assets that are jointly owned with another person may be sold by your Trustee. Call us at Professional Debt Solutions to discuss this further.

Your bankruptcy will be administered by a Registered Trustee or the government appointed trustee AFSA (Australian Financial Security Authority). PDS is affiliated with a Registered Trustee that may consent to act on your behalf.

Once you have become bankrupt, you may keep vehicles (cars or motorbikes) used mainly for transport where your interest in the vehicle is less than the indexed amount set by ASFA.
If your interest in the vehicle is valued higher than the prescribed amount, the Trustee is required to sell the vehicle and give back to you the value of the prescribed amount and the balance will be retained for your creditors.

No. Once you have become bankrupt the Bankruptcy Act 1966 prevents creditors from recovering any money from you and must cease any recovery action. If creditors do attempt to recover money or harass you, you will need to advise them of your bankruptcy number. If they continue to do so after notifying them, you should notify your Trustee.

Generally NO. But your bankruptcy may prevent you from undertaking employment in certain occupations or from holding certain licences. If you are unsure, contact us at PDS to discuss.

Alternatively contact any professional bodies you are currently registered with to ensure there are no restrictions in continuing your employment. Generally your employer is not normally notified of your bankruptcy.

If you earn less than the indexed amount you will not be required to make any contributions.
If your income is above the indexed statutory amount, you will be required to make “income contributions” to the Trustee for the benefit of your creditors. If you fail to make these payments, the trustee can garnishee your income via notice to your employer.

If you are able to pay your creditors in full, or you make an offer and your creditors accept this as full and final payment, then your bankruptcy will be annulled.