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Debts are an inevitable part of everyone’s lives. It can sometimes be painful and embarrassing when one cannot pay the debts. The Australian government has several debts. However there are other sectors of the economy that adds to the debt graph. When an individual faces a debt, there are several ways to settle it. When it is almost impossible to repay debts, one can declare bankruptcy. This should only be done after proper legal counsel and advice. In Australia, there was an increase in bankruptcy by 3.3% in March 2014 as compared to the previous years. Results of declaring bankruptcy When one declares a bankruptcy, it is a legal indication that the person is unable to settle all the debts. It further releases the debtor from all the debts that remain. However it imposes several restrictions on the debtor’s financial transactions for three years. A trustee is appointed to look after all the affairs of a person facing bankruptcy. Declaring a bankruptcy disables one from starting a business, operating a company or working in specific professional fields. Therefore a debtor has to give up control of assets either by consent or by court order. The court promises protection against any legal action by the creditors. Taking the case to court The bankruptcy cases are usually heard in the Federal Circuit Court. The person to whom one owes money is called the creditor. The creditor requests the court to declare the debtor as bankrupt. A creditor’s petition is given to the defaulter which mentions the time, place and date of the court proceedings. The creditor has to prove the accused guilty of committing an act of bankruptcy. The court verifies the identity of the accused and the amount that is to be paid. The accused can demand that a judge hears the case rather than a registrar. One is given a chance in the court room to respond to the creditor’s petition. Options by the court There are three options that will be laid down by the court. The first is that the accused agrees to being made bankrupt. The judge makes an order called the sequestration order that declares one as bankrupt. However in some cases the accused does not agree to be declared bankrupt. This is either because the accusation in the creditor’s petition is false or the debts can be paid. The accused can also request for an adjournment of the court proceedings to a later date. The court can question the validity of the request. However in most cases an adjournment is given to help the debtors to negotiate wisely with the creditors. Mortgage refinancing Obtaining a mortgage is possible after a bankruptcy if one plans the financial structure efficiently. It is essential that one plans for a refinancing of mortgage after a bankruptcy. It is a very challenging task because the bankruptcy usually reflects bad credit. There are many lenders who help one replace the existing loans for homes with a new mortgage plan. This helps in establishing a good credit by focusing on saving money and making all payments on time. Further the advice of a bankruptcy attorney can help one decide the right time for refinancing. Author Bio Author has many years of experience in content writing. He is the most celebrated and acclaimed author in financial sector. Now he is providing information on mortgage refinance with bad credit and how to declare bankruptcy.
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