Personal Insolvency: Extinguishing Debts and Protecting Family Assets

When Shakespeare’s character, Polonius, advised his son: “Neither a borrower nor a lender be”, he was referring to the hazards of lending to friends. He was not referring to the consequences of bankruptcy or insolvency under Australian law. Nevertheless, it is true that there are no winners in bankruptcy.

Bankrupt debtors lose most of their property, and they are required to contribute a substantial portion of their income towards the payment of their debts. There are restrictions on their right to travel and access credit.  They also suffer a loss of status and reputation because of the public humiliation of bankruptcy.

This book is not a treatise on bankruptcy law. Rather, it addresses the fundamental questions of how personal insolvency procedures can provide a better return for creditors in a tax effective manner, and how insolvent debtors can preserve most of their significant assets to enable them to make a fresh start without crippling debts.

In a credit economy worth in excess of $3.5 trillion and a deep financial crisis caused by numerous factors, these are the pertinent questions:

• How can debtors use legitimate strategies to protect their assets from creditors?
• How should consumer debtors deal with unmanageable debts, aggressive debt collectors, and predatory debt management service providers?
• How can guarantors of consumer and business debts minimise their liabilities?
• How can debtors use debt agreements to extinguish their debts and protect their family assets whilst providing creditors with a reasonable dividend and useful tax deductions?
• How can insolvent businesses use the advantage of their exemption from the commercial forgiveness regime to attract white knight investors to assist their recovery?
• How can debtors protect their family home and superannuation benefits?
• How can bankrupts retain sufficient income to maintain a reasonable standard of living?
• How can spouses take advantage of the right of exoneration to protect their equity in the family home?

table of content

Preface
Table of Cases
Table of Statutes
AFSA Glossary
1. INTRODUCTION AND OVERVIEW
2. ASSET PROTECTION AND VOIDABLE TRANSACTIONS
3. DEBT MANAGEMENT SERVICES
4. CONSUMER PROTECTION RELATING TO DEBT COLLECTION
5. DEFENDING CONSUMERS WITH UNMANAGEABLE DEBTS
6. GUARANTEES GIVEN BY DIRECTORS AND TRUSTEES
7. DEFENDING GURANTORS
8. INSOLVENCY PROCEDURES FOR INDIVIDUALS
9. COMMERCIAL DEBT FORGIVENESS
10. PROPERTY AVAILABLE TO CREDITORS
11. VESTING ORDERS IN RELATION TO PROPERTY OR BENEFITS ACQUIRED BY RELATED ENTITIES THROUGH THE BANKRUPT’S SERVICES
12. INCOME DURING BANKRUPTCY
13. SECURITY INTERESTS GRANTED BY SOLE TRADERS AND PARTNERSHIPS IN BANKRUPTCY
14. INEFFECTIVE SECURITY INTERESTS
15. THE EQUITY OF EXONERATION
16. CONCLUSIONS
INDEX