Alternatives to Bankruptcy

In the complex world of finance and legal matters, clients often look to their trusted lawyers and accountants for guidance when facing financial distress. While it’s natural for professionals in these fields to want to help their clients navigate challenging situations, there comes a point where specialised expertise becomes invaluable. This is especially true when dealing with financial difficulties that may lead to insolvency or bankruptcy.

In this article, we explore the benefits of referring financially distressed clients to specialised insolvency professionals, highlighting how this collaborative approach can provide optimal solutions and peace of mind for both the client and the referring advisor.

1. Expertise Matters

Insolvency professionals are registered bankruptcy trustees and registered liquidators. Insolvency professionals are experts on how to deal with distressed situations due to unpaid debts, and have in depth knowledge of insolvency laws and formal restructuring. By referring your client to the insolvency professionals at BT Acumen, they will receive the highest level of expertise to address their specific financial challenges.

2. Focus on Core Services

When lawyers and accountants refer clients to insolvency professionals, it allows them to stay focused on their core services. Handling insolvency cases in-house can be time-consuming and may divert resources from other critical client matters. By collaborating with the BT Acumen team, you can maintain your primary focus while ensuring your clients receive the specialised assistance they need.

3. Tailored Solutions

Each financial distress situation is unique. As insolvency professionals, we are skilled at tailoring solutions to match a client’s specific circumstances. Whether it’s a personal bankruptcy or business insolvency, we can create customised strategies that align with the client’s goals and financial capabilities.

4. Regulatory Compliance

Navigating the legal complexities surrounding insolvency and bankruptcy requires a deep understanding of applicable laws and regulations. Insolvency professionals are well-versed in compliance, ensuring that every action taken adheres to legal requirements. This minimises the risk of legal complications down the road.

5. Speed and Efficiency

Time is often of the essence in financial distress cases. Insolvency professionals are trained to act swiftly and efficiently, minimising delays and expediting the resolution process. This can be a lifesaver for clients facing urgent financial crises.

6. Ensuring Respect and Dignity 

In every financial distress scenario, be it a creditor struggling to recover unpaid debts, an individual unable to meet all their creditors’ demands, or a business owner under the scrutiny of the ATO due to historical tax debt, BT Acumen maintains an equitable and respectful approach. We understand that life can present unforeseen challenges, and our role is not to pass judgment but to provide the expertise and guidance needed to navigate these complex financial issues.

One of the hallmarks of a reputable insolvency practitioner is their ability to address uncomfortable financial questions that others may shy away from. At BT Acumen, we do so with professionalism, empathy, and a commitment to finding practical solutions. Our goal is to assist clients in regaining control of their financial situation while preserving their dignity throughout the process.

7. Long-Term Financial Recovery

Ultimately, referring your clients to us helps them achieve long-term financial recovery. By leveraging our expertise, your clients can look forward to a more secure and prosperous future, free from the burden of past financial challenges.

Talk with Experienced Insolvency Professionals

By working with us, you can offer your clients comprehensive support during their most challenging times, and they will see you as a trusted advisor who always puts their needs first.

In our ongoing mission to provide accurate bankruptcy information, we’re back to debunk another set of common bankruptcy myths. These misconceptions often deter individuals from exploring bankruptcy, even when it could provide them with much-needed relief. Our objective is to equip you with the right knowledge about bankruptcy, allowing you to make informed decisions toward the best financial solutions.

1. There Is No Shame in Filing for Bankruptcy
   The belief that filing for bankruptcy reflects poorly on a person is simply untrue. In reality, the majority of people who file for bankruptcy are hardworking individuals navigating severe financial challenges. Australia’s bankruptcy laws exist to provide relief and a pathway to a fresh start for those facing overwhelming financial difficulties. Financial hardships can affect anyone, regardless of their background or circumstances. Filing for bankruptcy is not a reflection of someone’s character or financial responsibility. On the contrary, it can be a courageous, responsible, and honest decision—one that prioritises securing a stable future for themselves and their family. Recognising the need for help and taking steps to address financial distress is an act of strength, not failure. Bankruptcy is more common than many realise, and it’s an essential tool designed to help individuals regain control and move forward with dignity.

2. You can only go bankrupt once in a lifetime
   Contrary to popular belief, bankruptcy isn’t a once-in-a-lifetime event. Circumstances can lead individuals to seek bankruptcy relief multiple times. Life can throw unexpected challenges our way, such as job loss, business failure, divorce, illness, unforeseen expenses, or financial setbacks. Unfortunately, these circumstances can arise more than once in a person’s lifetime.

3. You can pick and choose which debts and property to list in your bankruptcy
   This isn’t true either. It’s against the law to selectively choose which debts and property to include in a bankruptcy. When petitioning for bankruptcy, all property and debts must be listed and disclosed to your Bankruptcy Trustee. Some people may wish to exclude a debt because they want to continue making payments, e.g.: a car loan, and the vehicle is used as security for the loan. A person can continue making monthly payments as long as the secured creditor accepts them. However, it must still be disclosed during the bankruptcy process.

4. Even if you go bankrupt, all creditors will still harass you and your family
   This is not accurate. When your bankruptcy petition is accepted, the Australian Financial Security Authority (AFSA) immediately notifies creditors about the bankruptcy. However, secured creditors and unsecured creditors are treated differently in bankruptcy. Bankruptcy doesn’t prevent secured creditors from collecting payments and pursuing late payments. To stop these actions, the person can choose to surrender the secured assets to the creditor. The secured creditor may sell the asset and use the sale proceeds to pay off the secured debt. If there is an outstanding balance after the sale, it becomes an unsecured debt. At this point, the creditor is treated the same as other unsecured creditors in the bankruptcy. Unsecured creditors are prohibited from taking any action against the individual once they declare bankruptcy.

Talk with an Experienced Bankruptcy Trustee: It’s crucial to recognise bankruptcy as a potential lifeline for people burdened by severe financial difficulties. It’s a tool aimed at helping them regain control and embark on a path to a more stable financial future. By contacting an experienced understanding insolvency professional, like those at BT Acumen, you can have financial recovery without judgment. To gain in-depth knowledge about bankruptcy or explore personal insolvency options, please contact BT Acumen’s office on (03) 9999 7946 or 0431 313 055, or via email us at info@btacumen.com.au. 

Unfortunately, there are some common misunderstandings about bankruptcy that may deter your clients who could benefit from it. These misunderstandings often come from well-meaning friends, family, or coworkers who might not have accurate information. We’ve identified eight of these misunderstandings, and we’ll begin to explain them below. Our goal is to provide you with the right information about bankruptcy so you can determine if it’s the best choice for your clients.

1. Bankruptcy is difficult
   While bankruptcy may appear to have many rules and seem somewhat confusing, it’s not so daunting that you should overlook the potential benefits it offers. With a skilled and experienced bankruptcy trustee on your side, you should feel at ease. The process is generally straightforward for most individuals. In fact, many of our clients have mentioned that they would have considered this option earlier had they known what the bankruptcy process entailed.
   
2. If I go bankrupt I will lose all my property and everything I have
   This isn’t accurate. Thanks to various exemptions within bankruptcy laws, most individuals who go bankrupt can retain their vehicle (provided it falls within a certain equity threshold) and essential household belongings. It’s important to understand that bankruptcy laws are designed to help rather than inflict harm. They’re not intended to force your clients into a situation where they have to live on the streets.

3. If I go bankrupt, I will never get credit again
   This isn’t entirely accurate. If a bankrupt individual applies for credit over a set amount, he or she must inform the credit provider of their bankruptcy. Credit reporting agencies keep records of a bankruptcy for five (5) years from the date a person becomes bankrupt, or two (2) years from when the bankruptcy ends, whichever is later. It is up to credit providers whether they are willing to extend credit to bankrupts and discharged bankrupts. But it is possible to rebuild credit after going through bankruptcy. Typically, when someone is considering bankruptcy, their credit rating is already in poor shape. In many cases, filing for bankruptcy can offer your clients an opportunity to begin repairing their credit rating. The reason is straightforward: their previous debts have been addressed and resolved. With a clean slate and post-discharge, they can establish themselves as responsible users of credit once again. In fact, some major banks, including at least one of the big-4 banks, are willing to extend credit to discharged bankrupts, provided they meet the repayment capacity, and the bank was not a creditor in the bankruptcy. Many bankrupts have successfully gone on to purchase homes after rebuilding their credit.

4. If I am married, my spouse must also go bankrupt
   This isn’t true. It is entirely possible for one spouse to go bankrupt without the other. In fact, there are many cases where it makes more sense for only one spouse to do it. Sometimes, misplaced fears can lead a spouse to request that their husband or wife not go bankrupt. However, it’s essential to know that hundreds of individuals file for bankruptcy without involving their spouse in the process. There may be some implications for jointly owned assets, such as a house or a motor vehicle. Typically, the bankrupt spouse’s share of jointly owned assets becomes part of the bankrupt estate. In many instances, the non-bankrupt spouse has the option to purchase the bankrupt estate’s interest in the asset.

Talk with experienced Bankruptcy Trustee: For our valued referrers, it’s important to recognise that bankruptcy can be a lifeline for clients dealing with severe financial burdens. It’s a tool designed to help them regain control and work towards a more secure financial future. By referring clients to experienced insolvency professionals like BT Acumen, you are offering them a path to financial recovery and a fresh start, without passing judgment on their financial situation. To get the facts about bankruptcy and learn about your personal bankruptcy options, call BT Acumen on (03) 9999 7946 or 0431 313 055, or send us an email at info@btacumen.com.au. Stay tuned for our next instalment in this series, where we’ll unravel another six bankruptcy myths.