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Personal Bankruptcy and How to Seek Help

In July 2022, there were 692 personal bankruptcies registered in Australia, more than a third of which were business-related. The good news is that this was a drop in his June monthly personal bankruptcies, but an increase across Australia (from 2215 to 2301) over the June quarter.

June is traditionally the time of year when bankruptcies surge because it’s the time when people start looking into EOFY’s personal and business financials and planning for the new financial year. Reviewing your financials more frequently can help you identify trends and problems sooner. Sole proprietors in particular try to release pressure and consider personal bankruptcy options during this time. This will lead to a spike in June.

The reality of doing business without government financial support is starting to be felt by sole proprietors, many of whom are now struggling to pay off the debt they incurred during the lockdown. Not too much is also important. The COVID lockdown feels like a lifetime ago, but remember it was only eight months ago.

In addition to that, the lack of confidence in the business has led individual traders to conclude that future cash flows are unlikely to meet not only current debt, but also past outstanding debt.

Sole proprietors who continue to seek direction from their financial advisors and accountants early in the new fiscal year may find it impractical to continue trading.

While bankruptcy may seem like the only option at first, there are other personal bankruptcy options available to sole proprietors. Small businesses facing hardship may seek to enter into debt agreements with their creditors. Although the term is now set at his 3 years (shortened from 7 to 10 years), the Personal Insolvency Practitioners Association (PIPA) will limit debtor hardships and increase creditors’ chances of recovery. Trying to make his 5 years more fair. Debt as much as possible.

In a recent article in the Accountants Daily, PIPA spokesman Ben Paris said the ATO’s resumption of debt collection (post-COVID) is pushing more company directors and small businesses to the brink. I was.

“As subcontractors and other sole proprietorships jump off the cliff of bankruptcy, debt contract reform is urgent,” Paris said.

“Pre-COVID, we had about 10,000 debt contracts a year, and now we have about 1,500,” he added. The law should consider including flexibility regarding repayment programs over a five-year period, which is desirable for both debtors and creditors.”

The IPA is in favor of removing debt contracts from its list of triggers that can bankrupt someone. This is welcome news for small businesses in difficult times.

Difficult business conditions are likely to continue for the foreseeable future, so it is important to understand the options available to businesses and individuals facing financial hardship and how to spot the signs.

1. Get financial advice early – The sooner you speak with a registered bankruptcy expert or financial counselor, the more likely you are to find a solution. Financial counselors are available through the Australian Financial Guarantee Authority, but you can also contact bankruptcy and restructuring experts for more personalized and bespoke advice.

2. Watch out for warning signs – Signs that you may be in trouble include failure to meet debt payments, lender refusal to extend credit or secure credit, failure to pay taxes, employee retirement pension For example, you are using the funds you set aside to pay off your debts.

3. Possible solution – Formal bankruptcy or personal bankruptcy are possible outcomes, but other options exist, such as temporary relief and payment arrangements. The sooner you seek help, the more options may be available.

Personal Bankruptcy and How to Seek Help

Source link Personal Bankruptcy and How to Seek Help

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