Invest in a failed business venture? Constantly juggle credit card balances? Have a mountain of outstanding bills and debts?

Today, personal insolvency is an undeniable issue. Finding yourself in financial difficulties can place significant pressure on your health and relationships. Heed the warning signs and take the requisite steps to regain control as early as possible.

If you do find yourself facing insolvency, you have options, including:

Voluntary Bankruptcy

A Trustee is appointed to investigate and administer the affairs of the bankrupt estate, realise assets and pay dividends. The bankrupt’s divisive property vests with the Trustee. Voluntary bankruptcy provides relief from the burden of debt to enable the bankrupt to make a fresh start, quickly. However, it can impact on the bankrupt’s ability to earn income, obtain future credit and travel overseas.

Part X Arrangement

The individual and creditors determine how the individual’s affairs should be administered outside of the rigid code of bankruptcy. This is seen as an alternative to bankruptcy for insolvent individuals who are able to reach agreement with their creditors regarding the settlement of their debts.

Part IX Arrangements

Also known as ‘debt agreements’, these arrangements are only available to individuals with a debt under a certain threshold. The individual is required to make a formal proposal to their creditors, such as, payment of less than the full amount, a moratorium on payment, or periodic payments of income. The proposal must be accepted via a ‘special resolution’ passed by at least seventy five per cent in value and a majority in number of creditors. 

Your insolvency checklist

• Cash flow is decreasing
• Unpaid creditors are pressing
• Accounts are unable to be paid when due
• Your debt burden is becoming unmanageable
• Sales and profits are down
• You don’t have a plan to boost business
• Your tax bills remain unpaid
• Your unpaid bills and credit card demands are mounting up