Your Business Angels - Something we need to talk about in time of trouble

Something we need to talk about in time of trouble

13.05.2020

The Australian Government has temporarily changed bankruptcy law to help protect people who are facing unmanageable debt as a result of the economic impacts of COVID-19.

If you’re a sole trader, or operating a business as a partnership, you could face personal bankruptcy if you can’t pay your debts.

If you’re in financial difficulty you can now apply for temporary debt protection; this prevents recovery action by unsecured creditors for six months. You can use the time to:

  • Change your habits, stop spending so that you don’t solve on crisis and create another. This can also mean a change of culture.
  • Seek help for those things that may have caused your problem. If you gamble start by getting rid of the betting app.
  • Be honest about your situation with those around, but do not ask them to bail you out if you haven’t changed your spending, financial and monetary habits and culture.
  • Consider negotiate payment plans with creditors if it makes sense, often things like part 9 and 10 arrangements are just another form of burden.
  • consider whether you require a formal insolvency option. Sometimes declaring bankrupt and just getting on with your life is a massive relief. You can still trade under an ABN.

In addition, the temporary debt relief measures have increased the:

  • minimum amount of debt that can trigger bankruptcy (from $5,000 to $20,000)
  • time an individual has to respond to a Bankruptcy Notice (from 21 days to six months) – but if it’s clear you are never going to pay the debts you are best to start the 3 year journey now. You are better to jump, than be pushed.

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