Declaring yourself BANKRUPT!!!

[Garpal Gumnut]

wise words C/F


Garps --- what r u thinking !! The Hitman has to learn from his unfortunate mistake ----- taking refuge in a system that eliminates responsibility by declaring bankruptcy will only make him more vulnerable next time --

the more expensive the lesson, the more reward is derived in the long term (assuming due diligence is added to the mix)

No mate

cuttle/f is givng him advice that betrays his 70 or 75 years of experience. That is ok for the cuttle but not appropriate for a 24 year old.

Any setback in your early twenties is huge. The expense is secondary.

This lad needs to engage in more age appropriate activities, lust, adultery, working for Macquarie/Rio Tinto, buying an SS Ute, chasing rich men's daughters etc etc

Not sitting with gormless CBA bank mangers working out interest rates for gawds sake my blood boils just thinking about ,

Imagine the scenario, ........... as the manager has slipped a bankrupt Storm 80yo out the door in to the Peoples Palace , and in walks hitman, need I go on...................

This lad needs to go bankrupt and flee his responsibilities.

gg

 

[Buckeroo]

No mate

cuttle/f is givng him advice that betrays his 70 or 75 years of experience. That is ok for the cuttle but not appropriate for a 24 year old.

Any setback in your early twenties is huge. The expense is secondary.

This lad needs to engage in more age appropriate activities, lust, adultery, working for Macquarie/Rio Tinto, buying an SS Ute, chasing rich men's daughters etc etc

Not sitting with gormless CBA bank mangers working out interest rates for gawds sake my blood boils just thinking about ,

Imagine the scenario, ........... as the manager has slipped a bankrupt Storm 80yo out the door in to the Peoples Palace , and in walks hitman, need I go on...................

This lad needs to go bankrupt and flee his responsibilities.

gg

Your a naughty, naughty boy Garpul Gumnut - I suppose though, that is the Queensland way, flee your responsibilities?

Didn't that guy Beattie do that?

Cheers

 

[cuttlefish]

cuttle/f is givng him advice that betrays his 70 or 75 years of experience.

haha I'm not that long in the tooth.

 

[moXJO]

Sounds like a bad experience moXJO not my experience with dealing with itsa .

Yes family and friends over the years have had dealings with itsa so I was able to see first hand. I wouldn't piss on itsa employees if they were on fire. There is one who I would love to mention his name who was the prince of pricks, even had a rep among fellow colleagues. Oh the stories I would love to tell

 

[hitmanlam]

Thankyou for the overwelming responses received so far.

Can I say that I was 22/23 when I took out that loan. I think that is way too young for a person to make major investment decisions in life. You should be at least 25 before you can take out a loan to invest. I am a different person to what I was 2 years ago, thats for sure. Its like yes, I am the same person but I was so young and naive that I feel like it almost wasn't me that made that decision. At that time in my life, I felt like I was invinsible! I'm not drawing away any resposibility because I fully accept the consequences. All I'm trying to say is that I wish someone had stopped or had prevented that young kid from making that poor decision. Maybe there is problem with the lending system itself that needs to be change. Cause trust me, there will be another kid down the track that is going to do the exact same mistake as me. I've certainly learnt my lesson. I am never ever going to use leverage again. I'm probably going to stick to term deposits and savings from now on.

Ok. Onto the responses so far. The arguments from both sides have been valid and I must say that its has almost become more so of a MORAL ISSUE for me now rather than which is the better decision to make.

I totally get what gg is saying. Im 24, and I'm only going to be 24 once. Do I want to spend my youth paying off a loan and working my a$$ off? Its a bigger cost for me 3 years now rather than the 3 years later down the track when im 80.

But paying off the loan is feasible and with a lot of descipline and thanks to the advice given by fellow asfers, I believe I can pay off the loan in 3 years. Also, I would avoid the traumas from the itsa for being bankrupt and its the right thing to do. So it pretty much comes down to this:

- would I rather slug it out for the next 3 years or:
- do I want to deal with the itsa for the next 5 years and deal with the consequences associated for being bankrupt.

Which one will "cost" more. And the cost I'm talking about here is the INTANGIBLE COST. My head is saying to pay off the loan but my heart is saying to just declare yourself bankrupt.

Morally, I should pay it off but its a high cost for trying to be morally correct.

Has anyone gone through the bankruptcy system before and experienced it first hand? All I want to know is how bad is it going to be? Will I be able to live a normal life for those five years or is it going to be so bad that I wish I had just paid off the loan.

HL

 

[nunthewiser]

- would I rather slug it out for the next 3 years or:
- do I want to deal with the itsa for the next 5 years and deal with the consequences associated for being bankrupt.


Morally, I should pay it off but its a high cost for trying to be morally correct.


HL

its 3 years also the term of banktruptcy and sometimes can be cut to 6 months for various good reasons


money and being morally correct is a kind of grey area i reckon personally ....... and all depends on what place they view it from

 

[BradK]

The bank would not think in such moral terms. CBA are ba$tards of the highest order.

But, I applaud your decision. Pay it off and it will be the best $50K education you ever had.

My brother has been $60k in cc debt for about 7 years now. Ha! HE SHOULD GO BANKRUPT... but he will never learn.

He wasted his 20s , his 30s - ... and he's about to head into his 40's. Still, he keeps whining about how he wants to own a house someday...

 

[Tink]

well at the end of the day its your choice

You either have 3 years of paying the loan

or 5 years of some one watching your every move when it comes to money choices..

I agree with Cuttlefish, take the experience and learn from it, I would pay it off.

You are young, 3 years is nothing and you will probably make some capital gains in the future which you can off set with this loss..I would also find out about the interest if it is tax deductable

I know one person that went bankrupt and it was a 7 years cant do anything experience. I am pretty sure that most creditors will know that you have put yourself through bankruptcy..thats what he went through..

I also agree with Trainspotter about the loan being given out so easily which was the Commonwealth Bank for this guy as well. I must admit I was surprised but I have noticed that he wasnt the first or last that a got huge loan with no reassurance..

 

[tech/a]

Has anyone gone through the bankruptcy system before and experienced it first hand? All I want to know is how bad is it going to be? Will I be able to live a normal life for those five years or is it going to be so bad that I wish I had just paid off the loan.

You understand the power of using other peoples money.
You dont understand quantification of RISK.

Your in that position RIGHT NOW. You are NOT quantifying RISK.

Go bankrupt and you will LOSE the ability of using other peoples money.
You wont be able to run your own business
No one will give you credit.
Banks wont give you an overdraft
You wont get a Credit card.
Property will be out of the question.
Leveraging shares in a screaming bull market (If and when it returns--Out of the equation)
You WILL become a member of the 95% of the world who never amount to much.
Difference is you HAVE A CHOICE.

You'll learn nothing.
Choose to be the enterpeneur you wanted to be and you may well find that $50k was well invested. You may answer the challenge by being more creative in demolishing the debt. Youll learn HOW!

Its easy to be a bum.
Just look around there are 1000s of them.
Entrepenuers??

 

[Sean K]

Can't you pay off this debt with a credit card?

 

[outback]

I'm with GG on this. If your'e a big enough pratt to borrow $50K at 16% interest to invest in a surefire thing, (I'm guessing #7 at Dapto), and you are now considering how to pay it back, even with a job, then you haven't a snowballs chance in hell of paying it back. Go bankrupt and accept your a failure.

 

[moXJO]

waza1960 gave some very good advice. You need to talk to a professional and find a solution that won't affect your credit rating too much and destroy any chance of further credit. You need to be smart about this and find out what the lowest risk option both mentally and financially is.

This is also one of those moments that should drive you into looking for alternative money streams other than your job. If you are in a major city money is easy. Time to get creative; don't define your next few years as 'the time of debt paying'. Start expanding your focus on making more money on the side.

Forget trying to be moral about this loan. Try and minimize the length, and severity of this situation. You need to work smart and get creative. If you managed to get 50k loan for investment purposes than you must have some ability. Don't crumple into a fear ball at this moment, you don't have a lot to lose (just protect your credit rating as best you can).

I have dealt directly with family and friends going through bankruptcy at great cost. But they all had assets, and it was to do with failed business ventures so it was not pretty and very stressful. You are not in the same position. Find a good professional and get advice. Don't be scared to seek other opinions. But deal with it as soon as possible. You need to be presice about the best way to deal with the debt.

 

[waza1960]

• Has anyone gone through the bankruptcy system before and experienced it first hand? All I want to know is how bad is it going to be? Will I be able to live a normal life for those five years or is it going to be so bad that I wish I had just paid off the loan.

Unfortunately I have had first hand experience of a Part 10 arrangement and Bankrupcy.Again the bankrupcy term is 3 yearsand life will resume pretty much as normal except for some conditions such as you must have a reason if you want to travel out of Australia and if you earn over a certain amount /year (about 50k I think) they will want a percentage.Your credit obtaining ability will be damaged somewhat although not to the extent mentioned in some of the posts, but so what use that to save money and spend only what you have unlike 90% of the population.

• Morally, I should pay it off but its a high cost for trying to be morally correct.

The moral argument here is distorted in my view

• money and being morally correct is a kind of grey area i reckon personally ....... and all depends on what place they view it from

Totally agree,by entering Bankrupcy you are not avoiding responsibility you are altering it.You still pay a price for bankrupcy and its not easy or to be recommended lightly.

 

[Tink]

Geez you're right!

Before declaring bankruptcy though, go to the bank and get another $50k unsecured on top of the current one ... go the casino and put it all on RED (it has to be red ye hear) ... if red comes up you've got your clean slate ... if it does't carry on as per GG's idea.

LOL had to laugh at this one...........if you are going to go bankrupt, may as well make it worth its while..

 

[waza1960]

• Go bankrupt and you will LOSE the ability of using other peoples money.

Dissagree You will be able to eventually use other peoples money

• You wont be able to run your own business

Again dissagree of course you can run a business plenty of options available just a few extra issues to deal with.

No one will give you credit.

some will some won't

• Banks wont give you an overdraft
• You wont get a Credit card.

Stuff the credit cards and overdrafts this can be a GOOD THING

Property will be out of the question.

eventually will be possible

Leveraging shares in a screaming bull market (If and when it returns--Out of the equation)

Again possible with time

You WILL become a member of the 95% of the world who never amount to much.

Strongly dissagree a lot of wealthy people have being bankrupt or undergone arrangements on there way to being extremely successfull

 

[tech/a]

Happy to disagree with you.
We are talking with a 23 yr old.
Hardly someone savvy.
We are also talking about a bankruptcy of $50k hardly a significant amount (I know it is to our potential Bankrupt).
This bankruptcy comes about through poor judgement and is soley caused by our friend.
Most of those who bounce back have become so due to factors beyond their control.18% interest rates/A debtor falling over and your one of the domino effects as 2 examples.

Sure he "could" bounce back.
But with bankruptcy recorded on every credit providers computer in the land,I reckon hes way way behind the 8 ball.

But hey go bankrupt. Dont bother me. I'm one that Didnt and Glad I didnt--2wice.

 

[trainspotter]

Yeppers CRAA (credit reference association of australia) will have your name all over it for a period of SEVEN YEARS. Anytime you try and borrow money, even get a telephone line or mobile from Telstra, your name will be RED FLAGGED and due to the GFC, credit providers are not really happy to lend to anyone with CRAA. PERIOD.

http://www.foxsymes.com.au/bankruptcylaws.htm for legal advice

http://www.itsa.gov.au/ for the government advice.

http://www.dontevergobankrupt.com.au for my advice

 

[gooner]

I had a stable job at a accounting firm for about 2 years (55k p.a).

Hitman,

One think to consider is your professional career. Not only does bankruptcy look bad, but it has other consequences. You mention accounting. I think the standard response of the Institute of Chartered Accountants is to exclude bankrupts from membership for three years (based on my very quick view of their website - check if this applies to you).

Not sure if CPA's take the same approach.

Just another thing to think about when you weigh up pros and cons.

Personally, I would try and negotiate with the CBA- take a financial counsellor's advice and see where you get to.

 

[waza1960]

• Bankrupcy the moral argument:

• The moral argument is clouded and filtered by the immoral actions that we see depicted in the media everyday i.e money being hidden away, assets transferred,of course these are immoral actions.

• However if you made a mistake and you are don't have any assets then Bankrupcy of itself is not immoral or avoiding responsiblity.How can morality even be mentioned regarding banks what a joke? Was it moral to charge 16% on the loan in the first place?If the bank issued the loan unsecured then it understood the risks hence the 16%.

As far as financial or legal advise I think its a waste of time re the bankrupcy option unless the numbers are substantial enough they generally are of little help in my opinion.They could be of assistance though if you take the repayment option

• 
  Summary: I think its a 50:50 judgement which way you go,its true that 50K / three years to pay it off is doable you just have to decide if thats what you want to do,its also true that bankrupcy is a hassle and not to be taken lightly.

A final suggestion would be to fill out the relevent forms from ITSA (downloadable from their site) try to borrow some money from relatives,take the forms to the bank and tell them that you will be filling for bankrupcy unless you can arrange a final settlement of the loan of maybe 20% of the total it may work .Repayment agreements with banks seldom work in your favour as they still charge interest and still have you hooked, anyway all the best with your decision

 

[waza1960]

But hey go bankrupt. Dont bother me. I'm one that Didnt and Glad I didnt--2wice.

Anyone who can avoid bankrupcy are to be commended but you have to weigh up the costs of doing so.I'm not necessarily recommending Bankrupcy just trying to clarify the issues and give a little advise.Sometimes Bankrupcy is the only option.Didn't mean bother you Tech