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Hitting the Reset Button - What That Means for You

This is something that we should take time to talk about and make sure you are across.

The benefit you will get from hitting the reset button will depend on your circumstances, it is not the same for everyone and it is important that you know how hitting the reset button and filing for bankruptcy will help you.

We often speak to people about this as it is important for you to know what you are looking for and why hitting the reset button and seeking the protection of bankruptcy will help you.

To help you, we would like to give you some of the answers we have received when we’ve asked persons why they were filing for bankruptcy.

I need certainty, I cannot take it any longer with the debt hanging over me.

  • I need security
  • I need to feel safe
  • I need to become financially secure
  • I need the debt collectors calls to stop

It is interesting, overwhelmingly the main things people tell us they are looking for can largely be summarised as certainty, safety and security.
Our comment to you is that we are all looking for certainty, safety and security in our lives. These are very normal and reasonable core values to pursue and we do understand that having unmanageable debt can take them from you. Hitting the reset button to become bankrupt is not just about the money, bankruptcy provides the opportunity to restore these core values.

So let’s explore this further and have a look at what bankruptcy can do to help restore each of these core values.

Certainty

When talking to people who are considering bankruptcy, they often tell us that they are overwhelmed by their debt. They cannot plan for anything and are living one day at a time. They do not know what their creditors will do next or what the creditors can do to them.
This uncertainty causes stress and wears people down over time.

OK, so how does bankruptcy help to give certainty?

Bankruptcy captures the moment. That is, it draws a line in the sand and removes forever your debts at that time which are caught by bankruptcy.
The capturing of your debts by bankruptcy is not dependant on you paying money, it is non-conditional. Your debts are caught as soon as you become bankrupt and are gone forever.

What’s more, bankruptcy also gives you certainty going into the future. For example, if your leased car that you drove prior to becoming bankrupt is sold by the lender for a shortfall some 6 months later, that debt will be caught by your bankruptcy. Another example, if you put your company into liquidation prior to your bankruptcy, any claim the liquidator may pursue you for, eg monies owing to the company or a liquidators insolvent trading claim etc are all caught by your bankruptcy, giving you certainty that the past financial problems are behind you.

Safety

This is an interesting and important value that must be restored. When talking to people considering bankruptcy, they often tell us that they are scared to answer their phone and open their mail. They are scared that debt collectors will turn up to their house at any time and do not feel they can relax.

So, how does bankruptcy restore safety?

When you become bankrupt, your unpaid debts caught by your bankruptcy immediately become owing by the bankrupt estate and are no longer owing by you. We often refer to people seeking the protection of bankruptcy. This could also be said as people seeking the safety of bankruptcy. Once you become bankrupt your creditors cannot chase you for monies owing, garnishee your wages, take you to court for debt collection, have a writ of execution served on you or turn up to your house. All issues regarding monies owing must be directed to the trustee of your bankrupt estate. Remember once you become bankrupt, the monies are owing by the bankrupt estate and not you. So, you can feel safe, answer your phone without being on guard, open your mail without fear and be living your life the way you should be.

Security

The other important value we need to restore is security. Having overwhelming debt takes your financial security from you. You cannot save or buy any assets without the fear that the creditor will take them from you in the future. There is the worry of losing your home, car and tools of trade and personal possessions.

So, how does filing for bankruptcy help you achieve financial security. Your first big step-up is that liabilities caught by your bankruptcy are gone forever! Your superannuation funds are protected for your retirement! Further, you can save money in your bank account and your savings are protected! What’s more, there is no limit on how much money you can save in your bank account during bankruptcy! It may even be possible to save your home.

It’s quite sobering really, bankruptcy is a big step forward, very quickly putting you on the road to financial security.

We hope this article has assisted you. We are here to help you Understand Bankruptcy. If you would like to discuss your situation give us a call on 1300 794 492 or email hello@understandingbankruptcy.com.au