Not every relationship is crystal clear. When you are going through the bankruptcy process, it can occur that you and your trustee are not actually on the same page. The Australian Financial Security Authority (AFSA) noted on August 5 that there were some issues people raised in the conduct of trustees administering their bankruptcies, including:

  • Being charged for work k they did not think they should have to pay for,
  • Incorrect estimations of what it would take to enforce or annul a bankruptcy,
  • Payment priorities (under section 109 of the Bankruptcy Act) not being followed,
  • Not being given the opportunity to approve remuneration before debts are paid.

As AFSA notes, these issues can result in more money being returned to the bankrupt. As the individual in charge of selling your assets, recovering your income and investigating your financial affairs, maintaining a healthy relationship with the trustee appointed to your bankruptcy is vital. However, communication is a two-way street that can prove difficult for both parties. Here is what you need to understand about the process.

Clear communication is key when you are dealing with bankruptcy.Clear communication is key when you are dealing with bankruptcy.

Pre-appointment advice – get the full picture

When you encounter financial difficulty and are looking for assistance, you want the full picture so you understand the consequences of each option. At the moment, there are approximately 710 liquidators in Australia and about 210 bankruptcy trustees. Each and every one will have a slightly different approach to personal insolvency or company liquidation or administration.

For example, liquidators will often only discuss a company's affairs and options, and fail to outline the potential personal financial impact for the company's director. This may result in steps being taken to deal with the company's position which then create a range of personal problems for the director that may lead to bankruptcy.

You may have questions about the impact of bankruptcy on your family home, future employment arrangements, ability to travel or inheritances you may become entitled to receive. Diving blindly into bankruptcy without knowing how you will be affected can be very costly down the track. 

With a wealth of personal and corporate insolvency experience on our team, and an approach to resolve problems with better outcomes for your business, you and your family, the professionals at Cactus Consulting can help answer all of your insolvency queries, and help you the right decisions about the options to deal with company debts and personal debts.

During the process – personal affairs are difficult to navigate

People's lives can be complicated, and it is often difficult for bankruptcy trustees to properly understand a person's circumstances when investigating their affairs.

Bankruptcy trustees often have limited access to personal information.

Bankruptcy trustees often have limited access to personal information, and are required to maintain a professional skepticism about details that are provided. For people not familiar with the bankruptcy process, this can lead to confusion.

This can in turn mean that bankruptcy trustees issue legal claims against associated entities of a bankrupt which may not be substantiated by the facts. For example, without all of the information available or due to a misunderstanding, a trustee may:

  • Refuse a bankrupt's request to travel,
  • Make a claim against property in the name of a bankrupt's spouse,
  • Assess a bankrupt's income higher because of related employers and benefits,
  • Object to a discharge from bankruptcy for up to five years, or
  • Simply communicate the situation poorly, breeding discontent and uncertainty about your financial future.

More often than not, these problems can be resolved with better communication.

More often than not, these problems can be resolved with better communication. With experienced insolvency professionals on our team at Cactus Consulting, we can assist people to liaise and negotiate with bankruptcy trustees to clarify your personal affairs and ensure nothing goes awry.

If you are unsure, ask

Bankruptcy trustees have to make decisions based on available information and documentation, which is often incomplete and complicated. As a result a bankrupt may not always agree with the decision their trustee has made, and the trustee may have made an incorrect decision. This is not an instance of trustees or creditors doing the wrong thing, simply a breakdown in communication that can occur for anyone that finds themselves navigating bankruptcy

Understanding the formal bankruptcy process is difficult, and for many people they will not know how to get through it. This is where we can lend a helping hand to ensure you get clarity, understanding and the right outcomes in your bankruptcy.

The Cactus Consulting difference

Most insolvency practitioners do not offer the informal advice and negotiation services we do at Cactus Consulting. With the right help and approach, your situation may be resolved without the need to go bankrupt. We offer the full range of solutions to solve your personal insolvency challenges. This stretches from organising informal arrangements and debt agreements to helping you process a corporate liquidation and restructuring a company.

No matter what your debt situation is, there are usually a number of solutions available to resolve it.  Give our team a call to prepare yourself against any financial difficulties that might arise.

Posted on 14-02-17 in Money management and bankruptcy, Personal finance insights and updates.