Debts & Creditors: What happens to them if I go bankrupt?

Debts & Creditors: What happens to them if I go bankrupt? The provider of this information is Insolvency & Trustee Services Ausralia.

DEBTS & CREDITORS: WHAT HAPPENS TO THEM IF I GO BANKRUPT? Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia. June 2004 Edition How will bankruptcy affect my debts? A debt is money that you owe to a creditor. Once you are bankrupt, creditors with debts included in bankruptcy should stop contacting you. You must include all your debts in your Statement of Affairs, including: debts you owe jointly with someone else any loans to you from friends and relatives. Your bankruptcy will not affect a creditor's right to pursue another person, such as: a person who is a guarantor for your debts debts in joint names with another person (eg your wife or husband). You are released from certain debts at the end of your bankruptcy (after discharge from bankruptcy). However. there may be some debts that you will still have to pay. Debts you still have to pay during bankruptcy 1. Debts which are not provable in bankruptcy. Creditors of this type of debt cannot receive any money from your bankrupt estate but they can continue debt recovery action against you even during bankruptcy eg: penalties and fines imposed by a court damages from accidents (eg car accidents) unless, before bankruptcy, the sum of damages has been fixed by a court judgment or you have a written agreement with the other party student assistance/supplement loans 2. Any new debts you run up on or after your date of bankruptcy. Debts you still have to pay after your bankruptcy ends Creditors of certain types of provable debt can both receive money from your bankrupt estate and continue debt recovery action against you after your bankruptcy ends eg: child support debts maintenance accumulated HECS (Higher Education Contribution Scheme) debts owing when you became bankrupt, excluding any amount shown on a notice of assessment issued by the Australian Tax Office (ATO) before your bankruptcy - ask the ATO if you need more information debts incurred by fraud. Note: non-payment of essential services (electricity, water, telephone etc) and parking/traffic fines can cause difficulties. See Unsecured Creditors for further details. Exempt assets are assets or property which cannot be sold in bankruptcy by the trustee More information on assets is available in the pamphlet: Assets: What happens to my assets if I go bankrupt? How will my creditors be affected? Secured creditors A secured creditor is a creditor who holds a security over your asset which entitles them to take and sell the asset if you fall behind in payments. Examples of secured creditors include: Banks with a mortgage over a house Finance companies with a chattel mortgage, hire purchase, lease or bill of sale over a car, furniture or electrical goods Creditors secured by government legislation over houses and land, such as council/shire rates and water rates. If you become bankrupt, secured creditors will probably contact you to find out what you plan to do. If you are in doubt about whether one of your creditors is secured, you should first ask the creditor. If you are still doubtful, ask a financial counsellor or your trustee. If you wish to keep an exempt asset which is secured, you will need to keep paying for it or the creditor will take it back. A secured creditor cannot take an asset back just because you are bankrupt. Your trustee can sell a non –exempt asset if it is of value, even if you are paying it off (eg a house). In some cases creditors retain ownership of items you have bought until their debt has been paid in full (eg retention of title, consignment, commission). Creditors who hold a security deposit or bond (eg a landlord) are entitled to keep it to reduce your debt. The ATO can keep your tax refund and offset it against any debt you owe to the ATO and/or other Commonwealth office (eg Child Support Agency, Centrelink). If a secured creditor incurs a loss from the sale of the secured asset, they may claim the loss in your bankruptcy as an unsecured creditor. Unsecured creditors An unsecured creditor is a creditor who generally does not have the right to take back an item you bought but have not paid for. Examples may include: banks, finance companies and credit unions for person loans, credit cards and store cards telephone and internet providers tradespeople such as builders and electricians professionals such as doctors and lawyers. If you become bankrupt, any legal action by unsecured creditors against you, such as a summons, garnishee (a compulsory deduction from your income or bank account) or recovery action by a sheriff or bailiff, must stop. If any unsecured creditors demand that you pay their debt, you should immediately tell your trustee who should inform the creditor of the terms of your bankruptcy. If you are being harassed or coerced about debts you may have rights under the Trade Practices Act. For further information visit the Australian Competition and Consumer Commission website www.accc.gov.au or call the Infocentre 1300 302 502. Providers of essential services (eg electricity, gas, telephone, water) to your home may disconnect the service if you do not pay your current account or pay a security deposit/bond. If you later move to another home and still owe them money, you may be required to pay an increased deposit/bond to obtain the service. In most States, if you do not pay debts for parking, traffic and other infringements of State laws, your driver’s licence and/or your motor vehicle registration may be suspended until payment is made. Bankruptcy does not stop such suspensions. Debts and creditors can be difficult to sort out. Talk to a financial counsellor or ITSA if you are unsure about what type of debts or creditors you have. ITSA offices can provide you with a list of advisers (see rear cover or www.itsa,gov.au) Where to contact us Telephone 1300 364 785 ITSA website wwwitsa.gov.au ITSA Offices ACT Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600 Tel: 1300 364 785 Fax: (02) 6270 3608 email: itsa.canberra@itsa.gov.au New South Wales GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000 Tel: 1300 364 785 Fax: (02) 8233 7891 email: itsa.sydney@itsa.gov.au Queensland Brisbane PO Box 10443 Adelaide Street BRISBANE QLD 4001 Level 16, 340 Adelaide Street BRISBANE OLD 4000 Tel: 1300 364 785 Fax: (07) 3360 5466 email: itsa.brisbane@itsa.gov.au Townsville PO Box 1527 TOWNSVILLE QLD 4810 Level 1, National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814 Tel: 1300 364 785 Fax: (07) 4727 0500 email: itsa.townsviIIe-0itsa.gov.au South Australia/Northern Territory GPO Box 2604 ADELAIDE SA 5001 Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000 Tel: 1300 364 785 Fax: (08) 8112 4305 email: itsa.adelaide@itsa.gov.au Tasmania GPO Box 850 HOBART TAS 7001 Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000 Tel: 1300 364 785 Fax: (03) 6221 7700 email: itsa.hobart@itsa.gov.au Victoria Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000 Tel: 1300 364 785 Fax: (03) 9272 4900 email: itsa.melbourne@itsa.gov.au Western Australia GPO Box H536 PERTH WA 6841 Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000 Tel: 1300 364 785 Fax: (08) 9268 1298 email: itsa.perth@itsa.gov.au More information pamphlets are available. See the website or contact ITSA for a complete list.

Can I Appeal? Review and appeal of trustee and administrator decisions

Can I Appeal? Review and appeal of trustee and administrator decisions The provider of this information is Insolvency & Trustee Services Ausralia.

CAN I APPEAL? REVIEW AND APPEAL OF TRUSTEE AND ADMINISTRATOR DECISIONS Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia. January 2004 Edition About Bankruptcy Regulations Bankruptcy Regulation is an independent branch of ITSA which reports directly to the Inspector-General in Bankruptcy. It is responsible under the Bankruptcy Act for monitoring the standards of trustees and debt agreement administrators. Its role includes, on behalf of the Inspector-General in Bankruptcy, dealing with requests for review of certain decisions made by trustees and dealing with complaints against trustees and administrators. If Bankruptcy Regulation is unable by law to help, it will advise you of your options, such as making an application to the Court. See the Prescribed Information booklet for definitions of bankruptcy terms ITSA (Insolvency and Trustee Service Australia) is a Commonwealth government agency. ITSA is the trustee when a registered trustee is not appointed. Review procedures Trustees Trustees may make decisions which affect the rights of people whose estates are being administered under the Bankruptcy Act, their creditors and other people. If you have a query or concern about a trustee decision you should first contact them directly to seek resolution. If you do not resolve the matter you may be able to use the review process within the Act. You may ask for a review of certain decisions: in the first instance to your local Bankruptcy Regulation office (see rear cover) at a later stage, if required, to the Administrative Appeals Tribunal. Other decisions may be reviewed by an application to the Court. Debt agreement administrators If you are a debtor, a creditor or someone who is party to a specific Debt Agreement and you have a query or concern about the conduct of an administrator you should first contact them directly to seek resolution. If you do not resolve the matter you may refer it to Bankruptcy Regulation. More information is available in the pamphlet: Resolving Complaints about Trustees and Administrators Decisions which can be reviewed Bankruptcy Regulation may review the following decisions made by a trustee: filing of a notice of objection to discharge issuing an income contribution assessment rejecting a hardship application with respect to an income contribution assessment rejecting an application for early discharge (applies only to bankruptcies occurring prior to 5 May 2003. Bankruptcy Regulation must also review such a decision if requested by the Ombudsman. You have a 60 day time limit from the date the trustee informs you of their decision in which to loge a request for review. You cannot apply to the Administrative Appeals Tribunal for review unless: a prior review request has been made to Bankruptcy Regulation the review request has been assessed. Bankruptcy Regulation does not have the authority to review any other decision made by a trustee, such as: selling an asset (eg house, property, stock, plant and equipment, motor vehicle etc) admitting/rejecting a proof of debt. If you are unable to resolve the matter with the trustee, and the decision cannot be reviewed by Bankruptcy Regulation, your only remedy may be to apply to the Court. For example, a creditor or bankrupt may apply to the Court for a review of a decision by a trustee to admit or reject a proof of debt. The application to the Court must be made within 21 days form the date of the decision. What documentation do I need? Your request to Bankruptcy Regulation for a review must be: in writing and lodged with Bankruptcy Regulation, and accompanied by: a copy of the document showing the trustee’s decision an explanation of why you consider the decision should be reviewed any documents to support your request. Time period of review Bankruptcy Regulation must decide within 60 days after you lodge a request for review whether to review the decision and, if so, make a decision on the review. What does it cost? There is no charge for a review undertaken by Bankruptcy Regulation. How is my request handled? Your request for a review will be acknowledged in writing within 7 days of receipt. Bankruptcy Regulation will contact the trustee to find out if further documents are available to assist the review process. You may need to provide further documents to enable the process to proceed. If the investigation of your review is not finalized within 28 days, you will be informed of the progress of the investigation. Where Bankruptcy Regulation has not made a decision within 60 days, it is taken to have reviewed the trustee’s decision and confirmed it. If your review request is not upheld, Bankruptcy Regulation will advise you of your further rights of appeal. Decision in writing Bankruptcy Regulation will provide you and the trustee with a written decision. Review of Trustee’s Fees A creditor or bankrupt dissatisfied with a registered trustee’s claim for fees and costs may request the Official Receiver for a review. This is called a ‘taxing of costs’. The request must be made within 28 days of you becoming aware of the amount of the claim. Generally the person who requests that the claim be taxed will bear the costs of taxation which is charged at an hourly rate. If taxation results in a reduction of at least 15% in the amount of a claim, the trustee must bear the costs of the taxation. ITSA’s trustee fees imposed in a bankruptcy may be waived or remitted by application to the Inspector-General in Bankruptcy. The grounds for remission of waiver are that: payment of the fee will cause undue hardship to the person liable to pay the fee; or there are exceptional circumstances in which it is proper and reasonable to do so. Applications, in writing, may be sent to Bankruptcy Regulation (see rear cover) or any ITSA office. A decision will be made usually within 28 days of an application. What else can Bankruptcy Regulation help with? If you have a complaint relating to the actions of a trustee, debt agreement administrator or a controlling trustee, you should follow the procedure set out in the pamphlet: Resolving Complaints about Trustees and Administrators Further information about what you can expect from Bankruptcy Regulation and ITSA generally is available in the Client Service Charter Where to contact us ITSA website wwwitsa.gov.au For more information please contact a Bankruptcy Regulation Office Queensland and NT Bankruptcy Regulation PO Box 10443, Adelaide St Brisbane QLD 4000 Ph: 07 3360 5425 Fax: 07 3360 5402 email: br.qld@itsa.gov.au New South Wales and ACT Bankruptcy Regulation Level 8, 135 King St SYDNEY NSW 2000 Ph: 02 8233 7857 Fax: 02 8233 7805 email: br.nsw@itsa.gov.au Western Australia Bankruptcy Regulation GPO Box H536 Perth WA 6001 Ph: 08 9268 1204 Fax: 08 9268 1287 email: br.wa@itsa.gov.au Victoria and Tasmania Bankruptcy Regulation Level 10, 360 Elizabeth St MELBOURNE VIC 3000 Ph: 03 9272 4800 Fax: 03 9272 4940 email: br.vic@itsa.gov.au South Australia Bankruptcy Regulation GPO Box 2604 ADELAIDE SA 5001 Ph: 08 8112 4315 Fax: 08 8112 4304 email: br.sa@itsa.gov.au

Assets: What happens to my assets if I go bankrupt?

Assets: What happens to my assets if I go bankrupt? The provider of this information is Insolvency & Trustee Services Ausralia.

ASSETS – WHAT HAPPENS TO MY ASSETS IF I GO BANKRUPT? Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia. June 2004 Edition What are assets? Assets or property are anything you own when you become bankrupt or anything you buy or receive before the end of your bankruptcy. Income you earn during bankruptcy is not included but will be taken into account in your income contributions assessment. More information is available in the pamphlet: Income Contributions Going bankrupt will affect your assets. Some assets are exempt, which means you may keep them. Some assets are non-exempt or divisible, which means your trustee may sell them for the benefit of your creditors. What assets may 1 keep? The Bankruptcy Act sets out a list of exempt or protected assets, for example: most ordinary household or personal items, such as clothes, furniture, kitchen appliances and equipment, a TV, video recorder, stereo, washing machine, and items mainly for the use of children or students in the house There are circumstances where some of these things would be sold, such as antique furniture, and electrical equipment of significant value. tools used to earn an income, up to a limit of $2,900 (indexed) - tools over this limit may be sold by your trustee Indexed means the amount regularly changes in line with the Consumer Price index or the base pension rate vehicles (cars or motorbikes) used mainly for transport, up to a combined limit of $5,800 (indexed). The limit refers to your equity in the vehicles (the value of the car minus the sum owing under finance) superannuation and life assurance policies up to the pension Reasonable Benefit Limit (as worked out under the Income Tax Assessment Act 1936) compensation for a personal injury (eg from a car accident or workers compensation) assets bought with protected monies Protected monies are monies that cannot be claimed by a trustee eg personal compensation money, certain government grants re-establishment grants to farmers, including grants under the Rural Adjustment Act 1992 or Farm Household Support Act 1992 property protected under the Defence Service Homes Act 1918 an asset held by you in trust for another person (eg a child’s bank account). Awards of a sporting, cultural, military or academic nature made to you, such as medals or trophies but not cash or jewellery, and claimed as having sentimental value may be exempted by a vote of creditors. If you are buying an exempt asset under finance, you will only be able to keep it if you continue to pay for it. Warning: There are penalties if you fail to: disclose assets on your Statement of Affairs disclose to your trustee in writing within 14 days any assets you acquire during bankruptcy. What assets will my trustee deal with? Your trustee will sell or distribute your non-exempt (divisible) assets and any assets that have a value over a specified limit. Your assets include those you own when you become bankrupt, or any you acquire or receive before the end of your bankruptcy. These assets may be in: Australia or overseas your possession or someone else’s. Examples of divisible assets include: houses, apartments, land, farm and business premises (including leases) cars, trucks,vans, caravans, trailers, motorbikes, boats and aircraft shares and other investments (including shares held in your employer’s business) tax refunds for income earned before you became bankrupt money owed to you livestock and farming crops your right as a beneficiary in a deceased estate, even if the person dies during your bankruptcy antiques, collectables and jewellery business and business assets, including goodwill, stock, equipment, machinery, vehicles, fixtures and fittings and an interest in a partnership leaseholds, franchises, licences and patents a right to commence or continue legal proceedings/legal actions money with deposit taking organizations (eg banks, credit unions, licensed totalisator/betting agencies) lottery winnings and other competition prizes. Warning: You may be liable for Capital Gains Tax in some cases. What about assets I own with another person? If you have a share in a non-exempt asset, for example a house, your trustee can sell your share. If the co-owner is not also bankrupt, the trustee may agree to sell your share to them, but it would have to be for at least as much as the trustee could get from selling it on the open market. If an agreement cannot be reached with the other owner, the trustee may apply to the Court for an order to sell the property. What does my trustee do with the money obtained from my assets? Your trustee’s aim is to pay your creditors and his or her own fees and expenses plus the government realisations charge. Your trustee will sell an asset if there will be an expected surplus after selling costs and expenses and any debts owed to a secured creditor are taken out. The balance (surplus) is kept by the trustee for the benefit of your other creditors. Payments to creditors are called dividends. Example: House property $190,000 less secured creditors council/shire rates 4,000 bank mortgage 145,000 less costs of sale legal costs 1,000 advertising 1,000 agent's commission 6,000 Surplus $33,000 Trustee fees and expenses plus the government realisations charge will be paid out of the $33,000 and the balance distributed as dividends to creditors. Can my creditors take my assets? Secured creditors who hold a security over an asset may take and sell the asset if you fall behind in payments. Bankruptcy does not affect the rights of secured creditors. Common examples of secured assets are: a house subject to a mortgage with a bank a motor vehicle subject to a bill of sale goods under hire purchase, chattel mortgage, lease or bill of sale with a finance company assets with creditors secured by government legislation over houses and land, such as council/shire rates and water rates. If you are in doubt about whether one of your creditors is secured, you should first ask the creditor. If you are still doubtful, ask. a financial counsellor or your trustee. A list of financial counsellors and other advisors is available from ITSA offices (see rear cover) or from ITSAs website www.itsa.gov.au. If you wish to keep an exempt asset which is secured, you will need to keep paying for it or the creditor will take it back. A secured creditor cannot take an asset back just because you are bankrupt. Your trustee can sell a non-exempt (divisible) asset if it is of value, even if you are paying it off (eg a house). In some cases creditors retain ownership of items you have bought until their debt has been paid in full (eg retention of title, consignment and commission). More information is available in the pamphlet Debts and Creditors: What happens to them if go bankrupt? More information on trustee fees is available in the pamphlet: ITSA Statutory Fees & Charges What about assets I used to own? Trustees will investigate assets you owned in the 5 years before bankruptcy. If they find that you have given away or sold assets for less than their true value, they may recover these assets. Your trustee may also recover any assets that have been transferred for the purpose of defrauding your creditors (including assets transferred more than 5 years before bankruptcy). What happens to my assets when I am discharged from bankruptcy? Your trustee keeps any non-exempt assets which have not been sold before your discharge (end of bankruptcy). Your trustee may have been unable to sell your assets straight away; it may take some years. In limited circumstances, your trustee has a time limit of 6 years after your discharge to deal with assets (other than cash). The 6 year limit only applies to: assets disclosed in your statement of affairs, and assets acquired by you during bankruptcy, where you disclosed them in writing to your trustee within 14 days of you becoming aware of them. The 6 years do not begin until at least the date of your discharge from bankruptcy. Your trustee is able to extend this 6 year time limit by giving you written notice. If all your creditors and trustee's fees and expenses have been paid in full, any remaining assets will be returned to you. Where to contact us Telephone 1300 364 785 ITSA website wwwitsa.gov.au ITSA Offices ACT Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600 Tel: 1300 364 785 Fax: (02) 6270 3608 email: itsa.canberra@itsa.gov.au New South Wales GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000 Tel: 1300 364 785 Fax: (02) 8233 7891 email: itsa.sydney@itsa.gov.au Queensland Brisbane PO Box 10443 Adelaide Street BRISBANE QLD 4001 Level 16, 340 Adelaide Street BRISBANE OLD 4000 Tel: 1300 364 785 Fax: (07) 3360 5466 email: itsa.brisbane@itsa.gov.au Townsville PO Box 1527 TOWNSVILLE QLD 4810 Level 1, National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814 Tel: 1300 364 785 Fax: (07) 4727 0500 email: itsa.townsviIIe-0itsa.gov.au South Australia/Northern Territory GPO Box 2604 ADELAIDE SA 5001 Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000 Tel: 1300 364 785 Fax: (08) 8112 4305 email: itsa.adelaide@itsa.gov.au Tasmania GPO Box 850 HOBART TAS 7001 Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000 Tel: 1300 364 785 Fax: (03) 6221 7700 email: itsa.hobart@itsa.gov.au Victoria Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000 Tel: 1300 364 785 Fax: (03) 9272 4900 email: itsa.melbourne@itsa.gov.au Western Australia GPO Box H536 PERTH WA 6841 Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000 Tel: 1300 364 785 Fax: (08) 9268 1298 email: itsa.perth@itsa.gov.au More information pamphlets are available. See the website or contact ITSA for a complete list.

Annulment: Can my bankruptcy be cancelled?

Annulment: Can my bankruptcy be cancelled? The provider of this information is Insolvency & Trustee Services Ausralia.

ANNULMENT CAN MY BANKRUPTCY BE CANCELLED? Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia. December 2004 Edition What is an annulment? Annulment is the cancellation of bankruptcy before the end of the normal 3 year period. Bankruptcies are usually annulled: if the creditors’ debts and trustee’s expenses and fees have been paid in full, or if creditors have accepted an offer of something less than payment in full (a composition or arrangement), or by application to the Court, in some limited circumstances. Effects of an annulment your annulment is recorded on the National Personal Insolvency Index (NPII) database and is available to the public. Your name will appear on the NPII forever. More information is available in the pamphlet: Searching the Public Record you will need to contact commercial credit reference agencies to record the annulment. assets not needed by your trustee to pay your creditors or expenses and fees may be returned to you. More information is available in the pamphlet: Assets: What happens to my assets if I go bankrupt? Annulment does not release you from: maintenance orders debts incurred by fraud prosecution for bankruptcy offences. Annulment by payment in full your bankruptcy may be annulled if: your creditors, and any interest payable on debts to creditors, and realisations charge, and your trustee’s expenses and fees have all been paid in full The money required for payment in full usually comes from the sale of assets by your trustee or from a source not otherwise available to the trustee, such as money provided by a relative. Your trustee will be able to advise you of the approximate sum required for payment in full. The exact sum will not be known however until all creditor’s claims, including interest, are resolved and your trustee’s fees and expensed are paid. Your bankruptcy will be annulled on the date the final payment is made from your bankruptcy. An asset is anything a person owns before going bankrupt, or buys or receives during bankruptcy A bankruptcy offence occurs when the bankrupt does not carry out an obligation under the Bankruptcy Act. They may be prosecuted and fined or imprisoned Realisations charge is a Commonwealth Government levy on all bankruptcies, compositions or arrangements. It is taken out before expenses, fees and dividends Your trustee is the person who administers your bankruptcy or Personal Insolvency Agreement; wither a registered trustee or ITSA See the Prescribed information booklet for definitions of other bankruptcy terms Annulment by a composition or arrangement during bankruptcy Compositions and arrangements are offers made by bankrupts through their trustees to finalise their debts. The creditors vote on whether to accept such offers. An offer: may involve assets already in the bankruptcy and needs to include other money or assets that would not normally be available to creditors, such as money provided by a relative. These offers benefit creditors as they receive a dividend that would not otherwise be available. All creditors will receive an equal rate of dividend unless your offer provides otherwise. Your written and signed offer must: set out the terms be lodged with the trustee provide for payment of the trustee’s fees and expenses. Before finalising your offer and asking your trustee to call a creditor’s meeting to formally consider the offer, you should: discuss with your trustee if there are any legislative requirements that may affect your offer discuss any proposed offer with major creditors to find out if it is acceptable. Your trustee may: refuse to call a meeting if the proposal does not provide for payment of trustee’s fees that have been approved by creditors but are unable to be taken out of the estate require a deposit to cover the expenses and fees of the meeting. Any money component of the offer will be held in trust until your offer is accepted by creditors. Creditor’s meeting Your trustee may call a meeting of creditors to consider and vote on your offer. The trustee will advertise this meeting and certain debtor information in a national and a regional newspaper Each creditor will be sent: a notice and agenda of the meeting a copy of your offer your trustee’s report Your trustee will be able to give you more information on how meetings are conducted. You must attend the meeting if requested by your trustee. As an alternative to holding a meeting the trustee may invite creditors to vote on the offer in writing if: the offer is straightforward and not expected to be varied or subject to further negotiation, and no creditor objects Trustee’s report The report to creditors must state whether they will benefit if the offer is accepted and tell them: who is providing the funds the expected dividend the trustee’s fees and expenses details of assets, realisations and dividends details of your conduct and financial dealings. A dividend is an amount paid to a creditor by a trustee to settle a debt. It is usually less than the amount originally owed to the creditor Creditor’s acceptance For your proposal to be accepted your trustee must receive ‘yes’ votes from: a majority in number of the creditors who vote and at least 75% in $ value of the creditors who vote. If your offer is accepted Your bankruptcy will be annulled immediately on acceptance of the offer by your creditors. Your trustee’s fees, the government realizations charge and the creditors will be paid according to the terms of your composition or arrangement. Details of your annulment are recorded on the NPII and are available to the public. All creditors with debts that can be claimed in your bankruptcy are then bound by the terms of the offer. More information is available in the pamphlet: Debts and Creditors If your offer is rejected If your offer is rejected your bankruptcy will continue. Your trustee will: keep funds covering the expenses and fees of calling the meeting from any deposit refund any money provided for the offer. Enforcement of the composition or arrangement The provisions of the offer may be enforced by the Federal Court or the Federal Magistrates Court on an application by an interested person. Disobedience of an order of the Court is contempt and is punishable accordingly. How is a composition or arrangement varied? Creditors, with your written consent, can vary the terms by passing a special resolution. If you wish to vary the terms you can make a written request to your trustee. The trustee sends notice to the creditors and, if there is no objection in writing, he or she can vary the terms. If a creditor objects, a creditors’ meeting can be called to consider the proposed amendment. For the proposed variation to be accepted, it must be passed by a special resolution of creditors. Special resolution – A majority in number of the creditors who vote and at least 75% in $value of the creditors who vote Setting aside a composition or arrangement Only the Court can set aside a composition or arrangement where: it is unreasonable it does not comply with the Bankruptcy Act or Regulations false or misleading information has been provided there is any other reason that the Court sees fit. In these cases the composition or arrangement is set aside on the basis that it should not have been accepted initially. The Court may also make you bankrupt. Court – The Federal Court or the Federal Magistrates Court Termination of a composition or arrangement The Court can terminate a composition or arrangement on application from you, a creditor or the trustee where: there is a likely injustice or delay to creditors you fail to carry out its terms and termination would be in the interests of creditors there is any other reason that the Court sees fit and termination would be in the interests of creditors. The Court may also make you bankrupt. If the trustee is satisfied that you are in default, a composition or arrangement can be terminated: without holding a creditors’ meeting if all creditors do not object to the trustee’s notice of the proposed termination by creditors, by ordinary resolution at a special meeting called to consider the termination. A composition or arrangement can also be terminated by an event specified in the agreement as causing termination Ordinary resolution – A majority in number of the creditors who vote Application to the Court If you think that you should not have been made bankrupt or should not have lodged your Debtor’s Petition, you may apply to the Court to have your bankruptcy annulled. These applications are rare and you should seek legal advice before making such an application. Where to contact us Telephone 1300 364 785 ITSA website wwwitsa.gov.au ITSA Offices ACT Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600 Tel: 1300 364 785 Fax: (02) 6270 3608 email: itsa.canberra@itsa.gov.au New South Wales GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000 Tel: 1300 364 785 Fax: (02) 8233 7891 email: itsa.sydney@itsa.gov.au Queensland Brisbane PO Box 10443 Adelaide Street BRISBANE QLD 4001 Level 16, 340 Adelaide Street BRISBANE OLD 4000 Tel: 1300 364 785 Fax: (07) 3360 5466 email: itsa.brisbane@itsa.gov.au Townsville PO Box 1527 TOWNSVILLE QLD 4810 Level 1, National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814 Tel: 1300 364 785 Fax: (07) 4727 0500 email: itsa.townsviIIe-0itsa.gov.au South Australia/Northern Territory GPO Box 2604 ADELAIDE SA 5001 Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000 Tel: 1300 364 785 Fax: (08) 8112 4305 email: itsa.adelaide@itsa.gov.au Tasmania GPO Box 850 HOBART TAS 7001 Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000 Tel: 1300 364 785 Fax: (03) 6221 7700 email: itsa.hobart@itsa.gov.au Victoria Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000 Tel: 1300 364 785 Fax: (03) 9272 4900 email: itsa.melbourne@itsa.gov.au Western Australia GPO Box H536 PERTH WA 6841 Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000 Tel: 1300 364 785 Fax: (08) 9268 1298 email: itsa.perth@itsa.gov.au More information pamphlets are available. See the website or contact ITSA for a complete list.

Cash rate break a good decision during lull - reposted by andre di cioccio

With consumer and business spending, building approvals, housing finance and retail sales showing lacklustre results, Australia’s largest independently-owned mortgage broker, Mortgage Choice, believes the Reserve Bank has made an accurate decision in keeping the cash rate at 4.5%.

Existing and potential property owners will be elated to hear the cash rate is on hold for a second month, as they reassess their budget for the new financial year. It means lenders will be much less likely to move mortgage interest rates up as winter takes hold.

Mortgage Choice said, “A ‘wait and see’ approach from the RBA is what borrowers need at the moment. Interest rates stood at an emergency setting over much of 2009, but they rose very quickly from then on and caught many people unaware.”

“We have not yet seen the full effect of the six official rate rises from October to May, or the effect of further mortgage rate increases by a number of lenders.

“Although employment is solid, our resource sector is strong and many property markets are moving at a healthy pace, consumer spending is subdued and sentiment has dropped, just as housing finance demand has over several consecutive months now. We’re also seeing a slowing of housing prices and global economic uncertainty continuing.

“Slowed housing finance demand and prices is a good thing, however, for those looking to enter the market. Less competition means some local areas may become a buyers’ market. Anyone with a healthy deposit or equity, a steady income, few debts, a good credit record and solid employment, may find they are well placed to build upon their financial portfolio now by buying property.

“Greater credit should also be given to Australian mortgage holders, the majority of whom are coping well with ten-year average standard variable interest rates.

“Clever borrowers used the relief of decades-low rates over late 2008 and most of 2009 to get ahead with their repayments and prepare for changes to rates and their financial situation. Many continue to do so. Our 2010 Recent First Homeowners Survey found 64% of respondents were making extra repayments, with the majority contributing as much as possible. This not only helps a borrower create a financial buffer, it shaves time off their loan term and off the overall interest owed.

“Still, we hope the RBA keeps the cash rate on hold for at least another quarter or until we see an upturn in consumer and business sentiment, spending and confidence. Another tap on the brakes may have a heavier effect than expected.”

No cuts on the RBA's radar - reposted by Andre Di Cioccio

The RBA statement was a breath of fresh air. Ultimately and relative to current market pricing (57% priced for a cut) the RBA statement is hawkish. There is no denying that. In reality though, they don’t seem to have changed their view much. I love them for that. I was actually concerned they may capitulate in the face of extreme bearish pressure - but no. “The global economy has continued to expand over recent months, consistent with a trend pace of growth. The expansion remains uneven with the major advanced economies recording only modest growth overall, but growth in Asia and Latin America, to date, very strong.”

The major caveat is sentiment in financial markets. As I’ve said before, financial markets are shaping up to be the single biggest threat to global growth. The Bank was conservative in its assessment “Caution in financial markets has been evident in the past couple of months, driven principally by concerns about European sovereigns and banks but also by some uncertainty about the pace of future global growth. Financial prices have been more volatile.”

It’s for this reason they took out the the "near-term” reference regarding monetary policy - a minor tweak from last month's “the Board views this setting of monetary policy as appropriate.”

So maybe we won’t get that August rate hike I’ve been forecasting, although I think that’s still the best bet for now. A lot will depend on how financial market sentiment is balanced with the CPI result on July 28. But make no mistake, the RBA is not entertaining the idea of a cut. At best they’ll push out plans for further rate increases.

The Bank retained its view that the terms of trade would add to incomes and demand. Indeed we got a taste of that earlier today with the trade data (where we saw exports rise 6% and imports rise 4%). Add to that positive commentary regarding the labour market, consumption, credit and business investment - well they haven’t left much room for doubt.

So that’s where we are at. Market sentiment may be poisonous, but if we have learnt one thing this year, it’s that sentiment can and does change rapidly. There are headwinds for sure and we are faced with very serious risks. Nevertheless, and as the RBA’s statement makes plain, there is more reason to believe that we'll stay firmly on the path to recovery. http://www.rba.gov.au/media-releases/2010/mr-10-12.html