I was under the impression that if a person was declared bankrupt,that stays with them for 7 years before they can be discharged.A workmate is going to declare himself bankrupt to get out of a tax mess,and he says he can be discharged in 18 months.Is this true?is there a sliding scale for the time of bankruptcy,depending on the amount owed?
Tools
Tools
Early discharge is straight forward if your friend fits the criteria, (last time I checked the debts had to be below $12500?). Have him/her call ITSA and they can explain, I’m sure its on the web page too.
I would still think its a last option though.
Regards
Tony
Hi Tony.
I agree,it should be a last resort,and I have tried to tell him it is a pretty drastic step to take.I hope his advice has been right.I know his tax bill alone was $26000,plus other debts.What is the ITSA?
Tools
Tools
Sorry, ITSA is the national govt bankrupty trustee body. And for the life of me I can’t think of the words in the acronym.
Regards
TonyI htink I recall reading somewhere that tax debts are the only debts that are never forgiven. So I hope you friend has done some good research.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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ATO now forgive but will never forget….
Originally posted by Terryw:I htink I recall reading somewhere that tax debts are the only debts that are never forgiven. So I hope you friend has done some good research.
Speaking from personal experience I can say that the ATO will forgive debts… eventually.
When I was discharged from bankruptcy I took the opportunity of getting myself sorted out properly and caught up on a heap of outstanding personal tax returns.
I was due a refund but my old tax debt “came up” out of the system when the personal tax return wa s lodged (this debt was current at time of bankruptcy).
What the ATO did was keep a portion of my overall tax refund and offset it against the outstanding debt.
The portion they kept was for personal tax returns PRIOR to bankruptcy. I received all refunds for personal tax returns during and after bankruptcy and the rest of the old debt has been forgiven.
Took a bit of convincing for them to do it but got there in the end.
By the way I would never recommend that a decision to go into bankruptcy is taken lightly.
In my case I was declared bankrupt by a business creditor (I undertook personal guarantees for a business loan).
It is quite a painful sitution to go through and even know where I have a highly profitable company with great cashflow (I am a computer consultant) I am finding it hard to obtain finance.
Not that I am worried though, eventually I will have enough of a deposit that I will get the loan on my terms and can proceed!
Good luck.
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