People in financial difficulty can now access clear information on personal insolvency with a new guide published by the Australian Financial Security Authority (AFSA).
Releasing its Bankruptcy: A fresh start booklet, the Authority said the guide described key concepts about personal insolvency aimed at helping people find the right option for them.
AFSA said declaring bankruptcy was just one option.
“After assessing your situation, you may find that you have unmanageable debt that you can’t resolve,” AFSA said.
“If this is the case, you will need to find the personal insolvency option that is right for you,” it said.
“When navigating your way to a fresh start, there are four options to explore: bankruptcy, a personal insolvency agreement, a debt agreement, or temporary debt protection.”
AFSA said each of these options had different eligibility criteria and varying consequences.
“It is important to consider each option carefully when deciding which one is best for your situation,” it said.
The Authority said bankruptcy was a legal process where a person was declared unable to pay their debts and it normally lasted three years and one day.
AFSA warned that bankruptcy could have a serious impact on people, including their ability to get credit, travel overseas or gain some types of employment.
It said a Personal Insolvency Agreement was an agreement with creditors that could include part payment by instalments or a lump sum, and would see a trustee appointed to take control of personal property and make an offer to creditors.
“You may be able to retain assets such as your house and car if the terms of the agreement allow.”
AFSA said another option was a Debt Agreement, where an individual made an agreement with their creditors to pay off their debts in instalments.
It said people should also consider a Temporary Debt Protection, which would give them a short period (21 days) to consider their options.
“In this time your unsecured creditors cannot take recovery action against you,” the Authority said.
AFSA’s eight-page booklet on personal insolvency can be accessed at this PS News link.
