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Bankruptcy: Breaking The Stigma · She's On The Money

• 0:00
  Speaker 1: She's on the Money. She's on the Money.
• 0:23
  Speaker 2: Hello, and welcome to She's on the Money, the podcast
• 0:26
  Speaker 2: for millennials who want financial freedom. Today we're getting right
• 0:30
  Speaker 2: into the nitty gritty of bankruptcy. What is it, who
• 0:33
  Speaker 2: is it the right option for, and what potential consequences
• 0:36
  Speaker 2: can it have on our future. My name is Jessica Ricky,
• 0:40
  Speaker 2: and today I'm joined by the light of my life.
• 0:43
  Speaker 3: Of your life.
• 0:45
  Speaker 2: Yeah, sorry, James, I was about to say that's dramatic.
• 0:50
  Speaker 3: I'll take it though.
• 0:50
  Speaker 4: I'm not going to ask any further questions, so just
• 0:53
  Speaker 4: move on, keep talking.
• 0:54
  Speaker 3: Just so that we don't take it back.
• 0:56
  Speaker 2: Well, today, when we were doing a little bit of
• 0:58
  Speaker 2: research for the show, I realized that I didn't even
• 1:01
  Speaker 2: know that an individual person can file for bankruptcy. I
• 1:05
  Speaker 2: thought it was a business thing. So to kick it off,
• 1:07
  Speaker 2: can you kind of just explain to me exactly what
• 1:10
  Speaker 2: bankruptcy actually means.
• 1:12
  Speaker 4: So, yes, businesses, but also people can file for bankruptcy,
• 1:17
  Speaker 4: and it's.
• 1:17
  Speaker 3: Something that we'll get into the nitty gritty.
• 1:19
  Speaker 4: Of it, as you said before, but it's something that
• 1:21
  Speaker 4: I think has a really unnecessary stigma associated with it
• 1:25
  Speaker 4: because for those people who it is the right option
• 1:28
  Speaker 4: for it can be really liberating, it can be really freeing,
• 1:31
  Speaker 4: and it can be actually something that gives them a
• 1:33
  Speaker 4: brand new clean slate to start off. But to jump
• 1:37
  Speaker 4: to the official description of bankruptcy, bankruptcy is a legal
• 1:41
  Speaker 4: process and it is available to individuals or entities like businesses,
• 1:45
  Speaker 4: who are unable to pay their debts. So bankruptcy releases
• 1:48
  Speaker 4: you from most of your debts, which, as I said before,
• 1:51
  Speaker 4: for most people comes as a huge relief and gives
• 1:54
  Speaker 4: them a fresh start. So there are a number of
• 1:57
  Speaker 4: ways to do this. In fact, when I say a
• 1:58
  Speaker 4: number of ways, I mean two. You can either do
• 2:01
  Speaker 4: it voluntarily or someone that you owe money to can
• 2:05
  Speaker 4: actually force it on you via the courts, which is
• 2:08
  Speaker 4: called a sequestration order. If that's not enough of a mouthful,
• 2:12
  Speaker 4: just ca that's stricky.
• 2:13
  Speaker 3: It's sequestration.
• 2:15
  Speaker 4: Say it with me, guys, but that's what it's called.
• 2:18
  Speaker 4: And usually bankruptcy lasts for three years and one day,
• 2:22
  Speaker 4: although in some instances it can actually be extended for
• 2:25
  Speaker 4: up to eight years. And it means a lot of
• 2:27
  Speaker 4: different things to a lot of different people. So we're
• 2:29
  Speaker 4: gonna unpack that today.
• 2:31
  Speaker 2: So when you go bankrupt what actually happens to the debt.
• 2:35
  Speaker 2: I'm assuming it doesn't just like poof into thin air.
• 2:38
  Speaker 4: Kinder, it does, but it doesn't. It's one of those
• 2:41
  Speaker 4: things where there are a lot of caveats, but you
• 2:43
  Speaker 4: typically don't need to pay your debts back other than
• 2:46
  Speaker 4: any secure debts, which we will go through shortly. But
• 2:49
  Speaker 4: typically the debts don't end up being paid in full,
• 2:52
  Speaker 4: although through your trustee, you can pay off as much
• 2:55
  Speaker 4: of the debt as humanly possible by selling your assets.
• 2:58
  Speaker 4: So they might actually force you to do this and
• 3:01
  Speaker 4: sell assets, and that's why it's really important to know
• 3:04
  Speaker 4: the difference between voluntary and forced bankruptcy. But they can
• 3:09
  Speaker 4: essentially force you to sell your assets, or you can
• 3:11
  Speaker 4: sell your assets to pay off some of the debt,
• 3:13
  Speaker 4: or in certain situations where you earn over a certain
• 3:15
  Speaker 4: amount of money, there are compulsory payments that come into
• 3:18
  Speaker 4: play that you might need to meet. So it's important
• 3:21
  Speaker 4: to understand that and what it actually means.
• 3:25
  Speaker 2: Can anybody go bankrupt or is there certain criteria that
• 3:28
  Speaker 2: you need to meet?
• 3:29
  Speaker 4: Look, there's criteria you need to meet, and I'm going
• 3:32
  Speaker 4: to give you a legal criteria now, but I think
• 3:34
  Speaker 4: that there are so many other things that we need
• 3:37
  Speaker 4: to take into consideration because there are some serious consequences
• 3:40
  Speaker 4: of going bankrupt. But essentially, to file for bankruptcy here
• 3:43
  Speaker 4: in Australia you need to meet too requirements. You need
• 3:46
  Speaker 4: to not be able to pay your debts when they
• 3:48
  Speaker 4: are due, and you need to be in Australia and
• 3:50
  Speaker 4: have a business or residential connection to Australia. So that
• 3:54
  Speaker 4: seems pretty broad, but it's something that we really do
• 3:57
  Speaker 4: need to understand the consequences of the decisions that we
• 4:00
  Speaker 4: are making.
• 4:02
  Speaker 2: So with that in mind, is it a good idea
• 4:04
  Speaker 2: in your opinion to file for bankruptcy?
• 4:07
  Speaker 3: Yes and no.
• 4:08
  Speaker 4: So yes it can be if it's the right thing
• 4:10
  Speaker 4: for you, and we'll go through this in a minute.
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  Speaker 4: But also no, it can be a bad decision if
• 4:15
  Speaker 4: it is not the right decision for you.
• 4:16
  Speaker 3: So it's one of.
• 4:17
  Speaker 4: Those things that you really need to consider. But there's
• 4:22
  Speaker 4: a lesser of two evils. So going through bankruptcy voluntarily
• 4:26
  Speaker 4: is obviously a lot softer you are in control and
• 4:29
  Speaker 4: you understand it. Yes, you will, you know, still have
• 4:32
  Speaker 4: to adhere to the process, but being forced into it
• 4:36
  Speaker 4: leaves you a lot less choice, and I think that
• 4:38
  Speaker 4: sometimes people end up being forced into bankruptcy because they've
• 4:42
  Speaker 4: said no to voluntary bankruptcy so many times because.
• 4:45
  Speaker 3: They're like, no, I don't want to do that. I
• 4:47
  Speaker 3: don't want to go bankrupt.
• 4:48
  Speaker 4: I don't want the negative consequences. But they haven't thought
• 4:51
  Speaker 4: far enough in advance to go, okay, cool. If I
• 4:54
  Speaker 4: don't choose this and actually deal with the process and
• 4:57
  Speaker 4: choose the assets that I want to sell to pay
• 4:59
  Speaker 4: back my debts, I'm actually going to end up in
• 5:01
  Speaker 4: a situation where somebody else is making that decision for
• 5:04
  Speaker 4: me and I have absolutely no control. So this is
• 5:07
  Speaker 4: all about education and understanding when this might be right
• 5:11
  Speaker 4: for you, but also what the process means and how
• 5:14
  Speaker 4: to support people that you know are going through this.
• 5:16
  Speaker 2: Process, because Jess, it is stressful, it sounds quite scary.
• 5:20
  Speaker 2: I'm not going to lie to you. And as you said, obviously,
• 5:24
  Speaker 2: I think with that big stigma, we really hope that
• 5:26
  Speaker 2: this episode can make some people feel a little bit
• 5:29
  Speaker 2: more comfortable with the concept. And if it is something
• 5:31
  Speaker 2: you have to do, you know for you always say
• 5:34
  Speaker 2: that your financial situation isn't a negative reflection of you.
• 5:37
  Speaker 2: You were doing the best you could with the tools
• 5:39
  Speaker 2: that you had at the time.
• 5:41
  Speaker 4: Maybe you could become me.
• 5:42
  Speaker 2: I literally am i adopel ganger who knows. But you know,
• 5:46
  Speaker 2: bankruptcy might just be a tool or a resource that
• 5:48
  Speaker 2: you need to utilize currently. But we do need to
• 5:51
  Speaker 2: consider those negative consequences. Can you kind of run us
• 5:54
  Speaker 2: through what those may or may not look like.
• 5:56
  Speaker 4: Yes, so obviously, if you are in a significant amount
• 5:59
  Speaker 4: of debt to clearing bankruptcy could be a massive relief.
• 6:03
  Speaker 4: But there are some things that we need to consider,
• 6:05
  Speaker 4: and I'm going to list them off. I have a
• 6:07
  Speaker 4: total of seven dot points that I have written down
• 6:09
  Speaker 4: that we are going to go through together. So the
• 6:11
  Speaker 4: first one is that it can impact your ability to
• 6:13
  Speaker 4: access credit.
• 6:14
  Speaker 3: In the future.
• 6:15
  Speaker 4: And while short term you might go, I don't want credit,
• 6:18
  Speaker 4: like that's fine, just take that away from me. If
• 6:21
  Speaker 4: you do apply for credit over a set amount, then
• 6:23
  Speaker 4: you'll be legally obligated to let the credit provider know
• 6:26
  Speaker 4: that you were bankrupt in the past, and then they
• 6:29
  Speaker 4: might decide not to lend to you. So this is
• 6:32
  Speaker 4: not just about getting another credit card. It could actually
• 6:35
  Speaker 4: impact your ability to get a home loan in the future.
• 6:39
  Speaker 4: And as we said before, Yes, it's usually for three
• 6:41
  Speaker 4: years and one day, but it could be up to
• 6:43
  Speaker 4: eight years, and you don't know what you want to
• 6:46
  Speaker 4: do in the next eight years, and from my perspective,
• 6:49
  Speaker 4: I don't want that decision taken away from me. But
• 6:52
  Speaker 4: credit reporting agencies do keep a record of your bankruptcy
• 6:55
  Speaker 4: for either two years from when it ends or five
• 6:58
  Speaker 4: years from the starting date of the bankruptcy, whichever is later.
• 7:03
  Speaker 3: Just to be a little bit technical.
• 7:04
  Speaker 2: There, So that'll be around for a little while.
• 7:07
  Speaker 4: It will stick around for a little while. But then
• 7:09
  Speaker 4: number two on my list of dot points is a
• 7:12
  Speaker 4: trustee will come on board to manage your bankruptcy. So
• 7:16
  Speaker 4: don't that sounds complicated. What is a trustee. It's essentially
• 7:19
  Speaker 4: somebody who's been appointed to look after you and this process,
• 7:23
  Speaker 4: and they're going to work with you and your creditors
• 7:25
  Speaker 4: to make sure that absolutely everybody is happy and working
• 7:28
  Speaker 4: towards an outcome that suits every single party. During the
• 7:32
  Speaker 4: three years that you are in bankruptcy, you'll actually need
• 7:35
  Speaker 4: to keep the trustee in the loop with lots of
• 7:37
  Speaker 4: things like specific life changes, and you'll need to provide
• 7:40
  Speaker 4: them with certain documents when required, So they kind of
• 7:43
  Speaker 4: become not the boss, but kind of the responsible entity
• 7:47
  Speaker 4: for this situation, and they need to actually make decisions
• 7:51
  Speaker 4: on your behalf. And as much as they are the
• 7:53
  Speaker 4: ones that are there to make sure everybody is happy,
• 7:56
  Speaker 4: it doesn't necessarily mean that you're going to get everything
• 7:58
  Speaker 4: that you want out of this recess. Their job is
• 8:01
  Speaker 4: essentially to make sure it is the best path forward,
• 8:04
  Speaker 4: and sometimes that's not exactly what you want, but it
• 8:07
  Speaker 4: is definitely for the better. To point number three, Jess,
• 8:11
  Speaker 4: is bankruptcy can actually impact your employment, your income, and
• 8:15
  Speaker 4: your business if you have one. So if you've declared
• 8:18
  Speaker 4: bankruptcy and things are going well but you're earning over
• 8:21
  Speaker 4: a set amount of money, then you might actually need
• 8:24
  Speaker 4: to make additional payments to your trustee during that period
• 8:27
  Speaker 4: of time because they're like, yeah, cool, Jess, Like you
• 8:29
  Speaker 4: declared bankruptcy and you definitely couldn't afford it, we get it,
• 8:33
  Speaker 4: but now you can, so you probably should do the
• 8:35
  Speaker 4: right thing. And look, I agree with it, but I
• 8:38
  Speaker 4: think it's really important to understand that it's not just
• 8:41
  Speaker 4: a get out of jail free card and you're wiping
• 8:43
  Speaker 4: the slate clean and then you can go make millions
• 8:45
  Speaker 4: of dollars in a different business because you've been extinguished.
• 8:48
  Speaker 3: Of all the debts that you had.
• 8:50
  Speaker 4: That's absolutely not the case, and I think that so
• 8:53
  Speaker 4: many people think that that's an option when it is not.
• 8:56
  Speaker 3: My friends, random question.
• 8:59
  Speaker 2: Now, we mentioned earlier that it can impact your ability
• 9:02
  Speaker 2: to get alone. If you're a business owner, can you
• 9:06
  Speaker 2: be required to sell business assets as well as your
• 9:09
  Speaker 2: personal act?
• 9:09
  Speaker 4: Absolutely, everything is fair game. It just depends how you've
• 9:13
  Speaker 4: been structured. But it is a really big deal.
• 9:15
  Speaker 2: Yeah, okay, all right.
• 9:16
  Speaker 4: Dot point number four is not that it's a massive deal,
• 9:19
  Speaker 4: but bankruptcy can actually impact your ability to travel overseas.
• 9:23
  Speaker 4: And I mean, right now, that is not something that.
• 9:25
  Speaker 3: Any of us even have the option of.
• 9:27
  Speaker 2: It's like, we're all bank bankrupt right now.
• 9:30
  Speaker 4: But in normal times, you would need to request permission
• 9:32
  Speaker 4: from your trustee before you actually travel overseas. And it's
• 9:36
  Speaker 4: actually an offense to travel without written permission.
• 9:38
  Speaker 3: Who would have thought.
• 9:39
  Speaker 4: It's like getting a signed slipped from your mum to
• 9:41
  Speaker 4: go on the school camp.
• 9:43
  Speaker 3: All right?
• 9:43
  Speaker 4: Number five, number five, our dot point is your assets
• 9:47
  Speaker 4: may be sold by your trustee, including your property. So
• 9:50
  Speaker 4: this is where we talk about voluntary versus in voluntary bankruptcy.
• 9:54
  Speaker 4: Like sometimes if you go voluntarily bankrupt you can have
• 9:57
  Speaker 4: more of a say in this process. But at the
• 10:00
  Speaker 4: end of the day, you need to pay those debts back.
• 10:02
  Speaker 4: So it doesn't mean you get to keep your house
• 10:04
  Speaker 4: and extinguish your personal debts. If you have an asset
• 10:07
  Speaker 4: that could potentially pay the debt that you've incurred off,
• 10:10
  Speaker 4: they're absolutely going to want to leverage that and make
• 10:13
  Speaker 4: sure that you get back to ground zero. It doesn't
• 10:16
  Speaker 4: mean you personally staying in that position. No matter how
• 10:19
  Speaker 4: long you saved for that house. They're going to go. Okay,
• 10:22
  Speaker 4: but I know, Jess that you have this massive mortgage
• 10:24
  Speaker 4: and you know you've got this beautiful home, But at
• 10:26
  Speaker 4: the end of the day, your personal debts are way
• 10:28
  Speaker 4: out weigh what that is, and if we sold your property,
• 10:31
  Speaker 4: we could extinguish some of those debts.
• 10:33
  Speaker 3: That's what they're going to do.
• 10:35
  Speaker 4: So it's not as though it's a get out of
• 10:37
  Speaker 4: jail free card and you get to keep your home.
• 10:39
  Speaker 4: It's a really dramatic process. My tot point number six
• 10:43
  Speaker 4: is bankruptcy does not mean all of your debts are gone.
• 10:47
  Speaker 4: So while most unsecured debts are sorted out by the bankruptcy.
• 10:50
  Speaker 4: So we're talking credit cards and your gas bill for example,
• 10:54
  Speaker 4: they are going to be covered by the bankruptcy. But
• 10:56
  Speaker 4: any secure debts that you have, like a car that
• 10:58
  Speaker 4: might still be under finance that you still want to
• 11:00
  Speaker 4: hold on to, they still need to be repaid. You
• 11:03
  Speaker 4: don't just get a car for free because you declared bankruptcy,
• 11:06
  Speaker 4: and then if you can't pay back that secured debt,
• 11:10
  Speaker 4: then you'll need to hand that item back to the creditor.
• 11:12
  Speaker 4: You just again can't keep the car. There's no good
• 11:15
  Speaker 4: outcome here. I've spoken to too many people historically that
• 11:19
  Speaker 4: are of the opinion they're like, oh, well, if I
• 11:20
  Speaker 4: declare bankruptcy, they'll get rid of my car Loan Like
• 11:23
  Speaker 4: yeh cool, but like the car's going to my friends,
• 11:26
  Speaker 4: Like you don't get the best of both worlds. It
• 11:28
  Speaker 4: is definitely a compromise. But at the end of the day,
• 11:31
  Speaker 4: as we're saying before, for some people, just an absolutely
• 11:35
  Speaker 4: clean slate is exactly what they need because they're too
• 11:38
  Speaker 4: far up that river, if that makes sense.
• 11:41
  Speaker 2: Yeah.
• 11:42
  Speaker 4: And then number seven, which I think is really important
• 11:45
  Speaker 4: because impacts your ability to run businesses in Australia and
• 11:48
  Speaker 4: it's actually public record is that you will permanently be
• 11:52
  Speaker 4: added to the National Personal Insolvency Index, which is a
• 11:56
  Speaker 4: public register listing all insolvency proceeds in Australia and anyone.
• 12:00
  Speaker 3: Can access that.
• 12:02
  Speaker 4: So it's not a bad thing. As I said before,
• 12:04
  Speaker 4: I don't think we should be ashamed of these things.
• 12:06
  Speaker 4: I don't think that we should, you know, have such
• 12:08
  Speaker 4: negative connotations associated with them. But at the end of
• 12:12
  Speaker 4: the day, for some people it is really important that
• 12:14
  Speaker 4: they know that because I know a few times I've
• 12:17
  Speaker 4: spoken to people that were horrified that people could access
• 12:20
  Speaker 4: that information and they just didn't.
• 12:23
  Speaker 3: Know that that was a part of the process. But yes,
• 12:25
  Speaker 3: it will be public knowledge. Wow.
• 12:27
  Speaker 2: So there's definitely a lot to take into consideration when
• 12:30
  Speaker 2: deciding if bankruptcy is maybe the route to go down.
• 12:33
  Speaker 2: And we'll be back after a really short break to
• 12:35
  Speaker 2: discuss the shame that can be tied to it sometimes
• 12:38
  Speaker 2: whether that is warranted or not, and some other options
• 12:40
  Speaker 2: for dealing with our debt if it does feel like
• 12:42
  Speaker 2: we're spiraling out of control already. B We said before
• 12:50
  Speaker 2: that there is a bit of a sense of shame
• 12:53
  Speaker 2: tied to filing for bankruptcy. I've seen some discussions in
• 12:56
  Speaker 2: the group previously, and someone named Carla mentioned that she
• 12:59
  Speaker 2: was stubborn to file for bankruptcy and permitted to paying
• 13:03
  Speaker 2: off her debts, which more power to you. But she
• 13:06
  Speaker 2: says that she regrets that decision and found it to
• 13:08
  Speaker 2: be a really traumatic time for her. What are attitudes
• 13:13
  Speaker 2: like when it comes to bankruptcy? And I mean, they
• 13:15
  Speaker 2: may not be right or a wrong, but can we
• 13:17
  Speaker 2: do anything about it?
• 13:19
  Speaker 3: Yes?
• 13:19
  Speaker 4: And no. I totally sympathize with Carla because sometimes you
• 13:23
  Speaker 4: definitely have your head in the sand about debt and
• 13:26
  Speaker 4: you don't want to get yourself out of it. I've
• 13:29
  Speaker 4: been in situations where I've sat down with people and
• 13:32
  Speaker 4: have done full financial advice in this situation historically, where
• 13:36
  Speaker 4: I've sat down with someone who was actually in close
• 13:38
  Speaker 4: to two hundred thousand dollars worth of personal debt. Wow,
• 13:41
  Speaker 4: we're not talking mortgages, We're not talking cars like literal
• 13:45
  Speaker 4: credit cards and personal loans that they then had nothing
• 13:48
  Speaker 4: to show for it. And I did all the calculations
• 13:51
  Speaker 4: and worked out that for them to pay back the
• 13:54
  Speaker 4: debt that they had at the income that they had
• 13:57
  Speaker 4: and you know, there are obviously a lot more factors,
• 13:59
  Speaker 4: but I'm not going to go into their personal situation
• 14:01
  Speaker 4: too deeply because that would not be appropriate. But essentially
• 14:05
  Speaker 4: I calculated it out, and if she'd actually stayed and
• 14:08
  Speaker 4: tried to pay out the debt, it would have taken
• 14:11
  Speaker 4: her one hundred years to pay that debt off. At
• 14:14
  Speaker 4: the credit ratings there were obviously people will turn around
• 14:17
  Speaker 4: and say, okay, well, you probably should be consolidating that debt,
• 14:20
  Speaker 4: like we talked about on another podcast recently. But the
• 14:24
  Speaker 4: thing with that is because she was so far down
• 14:27
  Speaker 4: that river, nobody would consolidate that debt. So no bank
• 14:31
  Speaker 4: was willing to refinance, no bank was actually willing to
• 14:34
  Speaker 4: give her another credit card or another credit option, and
• 14:37
  Speaker 4: it was just a very sticky situation. But in that situation,
• 14:42
  Speaker 4: she didn't want to file for bankruptcy because she was
• 14:45
  Speaker 4: just so stuck to the idea that there was so
• 14:48
  Speaker 4: much shame associated with it and it was such a
• 14:50
  Speaker 4: bad thing. But essentially, Jess, we said before, the bankruptcy
• 14:55
  Speaker 4: sticks around for three years and one day or eight years,
• 14:58
  Speaker 4: it depends on the situation.
• 15:00
  Speaker 3: But one hundred years of.
• 15:01
  Speaker 4: Paying off debt, she would have had that for the
• 15:03
  Speaker 4: rest of her life or eight years of being under
• 15:07
  Speaker 4: these rules and regulations, but being financially free from the
• 15:11
  Speaker 4: debt that was weighing her down. To me, I could
• 15:13
  Speaker 4: fully comprehend that the bankruptcy option was the better option
• 15:17
  Speaker 4: for her, and I think that that's what Karla from
• 15:19
  Speaker 4: our community has been talking about. She stuck to it,
• 15:22
  Speaker 4: and she was like, no, I'm going to pay off
• 15:24
  Speaker 4: the debts myself. But what if those debts are so
• 15:27
  Speaker 4: overwhelming that it's going to take you thirty years plus
• 15:30
  Speaker 4: to get over them, plus the mental anguish and the
• 15:33
  Speaker 4: compromise and the lifestyle changes that would be associated, maybe
• 15:38
  Speaker 4: it's actually better to go down the bankruptcy process, wipe
• 15:41
  Speaker 4: your slight clean, and then be able to start building
• 15:44
  Speaker 4: your wealth back up and being financially responsible from there.
• 15:48
  Speaker 4: So yes, Jess, there is a sense of shame tied
• 15:51
  Speaker 4: to filing for bankruptcy, but I don't think it should
• 15:54
  Speaker 4: be there, especially if you've done your research and you
• 15:56
  Speaker 4: understand it. And I mean, I'm never going to judge
• 15:59
  Speaker 4: a friend. They turned around and said, hey, V Like,
• 16:01
  Speaker 4: I've just been in such a sticky situation. I've wracked
• 16:05
  Speaker 4: up all this debt and now I'm going to file
• 16:07
  Speaker 4: for bankruptcy. I think the most important thing is actually
• 16:11
  Speaker 4: really understanding that you are making a change. So if
• 16:14
  Speaker 4: you are going to be filing for bankruptcy, see it
• 16:17
  Speaker 4: as the clean slate, that it is not some kind
• 16:20
  Speaker 4: of punishment for getting in the debt, but rather a
• 16:22
  Speaker 4: second chance. And I think that that's a really beautiful
• 16:25
  Speaker 4: thing to be afforded in a world where we are
• 16:27
  Speaker 4: now able to educate ourselves on financial literacy to make
• 16:31
  Speaker 4: sure that we never get into that sticky situation again.
• 16:34
  Speaker 2: And if you are worried, I guess about the reaction
• 16:37
  Speaker 2: of people around you, I would say that you would
• 16:40
  Speaker 2: hope that if you have people who love and care
• 16:42
  Speaker 2: about you, they just want what's best for you. And
• 16:44
  Speaker 2: if you're able to explain to them, you know, sharing
• 16:47
  Speaker 2: as much or as little that you're comfortable sharing, that
• 16:50
  Speaker 2: this is a choice that you're making and that you've
• 16:52
  Speaker 2: thought it through and that it's going to put you
• 16:54
  Speaker 2: in the best possible position, you would hope that those
• 16:57
  Speaker 2: people will love and support you. And if they that's
• 17:00
  Speaker 2: what our community is for. We're here to tell you
• 17:02
  Speaker 2: that there shouldn't be any shame and I'm sure that
• 17:04
  Speaker 2: there are people in our community who have gone through
• 17:06
  Speaker 2: the exact same thing who are willing to back you
• 17:08
  Speaker 2: up and let you know that that's totally okay.
• 17:10
  Speaker 4: Absolutely, And I think that it actually goes a little
• 17:13
  Speaker 4: bit deeper than that, Jess. If you're surrounded by people
• 17:16
  Speaker 4: who aren't supporting you, why are you surrounded by them? Like,
• 17:20
  Speaker 4: I think we deserve better, and we don't actually have
• 17:23
  Speaker 4: to tell anybody that we're going through this process because
• 17:25
  Speaker 4: we actually don't owe anybody any kind of explanation, like
• 17:29
  Speaker 4: it's not their business. And as much as I'm very
• 17:32
  Speaker 4: open about finances and you know, talking about money like
• 17:36
  Speaker 4: it's still your story, you are absolutely in control of
• 17:39
  Speaker 4: who you share that with and who you don't share
• 17:41
  Speaker 4: that with. And I would hate to think that you
• 17:43
  Speaker 4: think you owe people in explanation for a decision that
• 17:47
  Speaker 4: you are making for the best for you. So I
• 17:49
  Speaker 4: think it's also important that you know what, if you
• 17:51
  Speaker 4: want to explain it to people, absolutely all powered to you.
• 17:54
  Speaker 4: It is absolutely worth having that conversation, and I think
• 17:57
  Speaker 4: you'll find that more people are supportive of you then less.
• 18:00
  Speaker 4: But at the same time, I think that you need
• 18:03
  Speaker 4: to also remember like, this is your journey. It's not
• 18:05
  Speaker 4: somebody else's decision to make, and it's actually up to you.
• 18:09
  Speaker 4: But that is my two cents.
• 18:11
  Speaker 2: Yeah. Absolutely, Now, if we are in a lot of
• 18:14
  Speaker 2: debt and maybe bankruptcy is a little bit intimidating, are
• 18:17
  Speaker 2: there other options that are available to potentially help us out. Yes,
• 18:21
  Speaker 2: of course, And this is where we can actually take
• 18:24
  Speaker 2: control and instead of putting our heads in the sand.
• 18:27
  Speaker 2: I say that so often, but putting our heads in
• 18:29
  Speaker 2: the sand and feeling like we.
• 18:31
  Speaker 4: Aren't in control. There are a few things that we
• 18:33
  Speaker 4: can do. There are three official ones, but to be honest,
• 18:36
  Speaker 4: if you've got debts that can't be repaid, the first
• 18:38
  Speaker 4: thing I would be doing is jumping on the phone
• 18:40
  Speaker 4: and jumping on the phone if it's a phone bill,
• 18:43
  Speaker 4: if it is a personal loan, if it is a
• 18:45
  Speaker 4: water bill or an electricity bill, and talking to the
• 18:48
  Speaker 4: people at that company and saying, hey, JS, I'm really sorry.
• 18:51
  Speaker 4: I'm actually in a really sticky situation like COVID's really
• 18:54
  Speaker 4: affected me, or I've lost my job, or I'm going
• 18:57
  Speaker 4: through this personal situation and I'm just wondering what you
• 19:00
  Speaker 4: can do for me to make this a bit easier, like,
• 19:03
  Speaker 4: can we change the terms of the agreement, can we
• 19:06
  Speaker 4: discount it significantly, or just negotiating with them potentially what
• 19:11
  Speaker 4: you can do? I promise the people on the end
• 19:13
  Speaker 4: of the phone are so understanding and really want to
• 19:16
  Speaker 4: help you. But there are a few quote official things
• 19:19
  Speaker 4: that we could do. The first thing is a debt agreement,
• 19:23
  Speaker 4: and this is where you and your creditors come to
• 19:25
  Speaker 4: an agreement on the amount of money that you can
• 19:27
  Speaker 4: realistically afford over a step period of time. So this
• 19:30
  Speaker 4: is where I was saying, get on the phone, have
• 19:32
  Speaker 4: a chat with them, ask if you can negotiate something
• 19:35
  Speaker 4: a little bit different to what you currently owe, because
• 19:38
  Speaker 4: what you currently owe isn't going to get paid. And
• 19:41
  Speaker 4: I think they're being really honest about that and calling
• 19:43
  Speaker 4: and being like, hey, v yep, so that thing I
• 19:45
  Speaker 4: owe you not going to get paid. What would you
• 19:47
  Speaker 4: compromise on. How can we make this work for both
• 19:50
  Speaker 4: of us so that you get paid and we don't
• 19:52
  Speaker 4: have to go to court? And they go, yeah, okay,
• 19:54
  Speaker 4: no problems, Jess. I'd actually take fifty bucks from you
• 19:57
  Speaker 4: instead of the full hundred and you go okay, well, yep,
• 20:00
  Speaker 4: that's more reasonable. Can I have three months. I think
• 20:03
  Speaker 4: it's really important to know that as much as you
• 20:05
  Speaker 4: might feel really out of control, you're still in power,
• 20:08
  Speaker 4: like you still actually have control, and you still have
• 20:11
  Speaker 4: a voice, and you still have the respect of others.
• 20:14
  Speaker 3: And you can actually ask for things.
• 20:16
  Speaker 4: And I think that often when we owe money, there's
• 20:19
  Speaker 4: a lot of shame associated with that because you go,
• 20:22
  Speaker 4: oh my god, I don't want to call them. I
• 20:23
  Speaker 4: owe them, you know, ten thousand dollars and it's just
• 20:26
  Speaker 4: not going to happen. Have the conversation. I promise you
• 20:29
  Speaker 4: it is not as overwhelming as you think it is.
• 20:32
  Speaker 2: I've seen a few people talk about this in the group,
• 20:34
  Speaker 2: particularly around when loans or money that they've owed have
• 20:39
  Speaker 2: been passed along to debt collectors, and people have been
• 20:42
  Speaker 2: able to negotiate with debt collectors, sometimes to knock thousands
• 20:46
  Speaker 2: of dollars.
• 20:46
  Speaker 1: Yeah, debt.
• 20:48
  Speaker 4: If it's at that point, absolutely try and negotiate and
• 20:51
  Speaker 4: ask them what they take, even put a number on
• 20:54
  Speaker 4: the table. I know people personally who have had you know, example,
• 20:58
  Speaker 4: debt collector coming from eleven thousand dollars and they say, okay, cool,
• 21:02
  Speaker 4: I'm actually really unable to pay that right now. I
• 21:05
  Speaker 4: know you're asking for it. There's six thousand dollars in
• 21:07
  Speaker 4: my savings account right now. If I give you that,
• 21:10
  Speaker 4: can we call it even? And debt collectors have actually
• 21:12
  Speaker 4: said yes to that historically. I'm not saying it will
• 21:15
  Speaker 4: work every single time, but if you don't ask, you're
• 21:18
  Speaker 4: never gonna get.
• 21:19
  Speaker 2: Yeah. Absolutely, what else can we do if we are
• 21:22
  Speaker 2: in a pile of debt trying to dig our way out.
• 21:24
  Speaker 4: So the next one is a personal insolvency agreement, and
• 21:27
  Speaker 4: this is a legally binding agreement where all of your
• 21:30
  Speaker 4: debts are paid in installments and it is agreed upon
• 21:32
  Speaker 4: by both you and your creditors. So similar to a
• 21:35
  Speaker 4: debt agreement, but it's a personal insolvency agreement. And the
• 21:38
  Speaker 4: third one is a temporary debt protection for twenty one days.
• 21:41
  Speaker 3: That means that you're protected.
• 21:43
  Speaker 4: For three weeks and unsecured creditors can't take action against you. Now,
• 21:47
  Speaker 4: I'm not saying that that's the be all, end all,
• 21:50
  Speaker 4: It's just a step that you can take if everything
• 21:52
  Speaker 4: is really overwhelming and you need a little bit of
• 21:55
  Speaker 4: time and you actually need to sort your stuff out.
• 21:58
  Speaker 3: That can be really powerful.
• 22:00
  Speaker 2: Amazing. Now, I know it's a little bit personal, but
• 22:02
  Speaker 2: there are probably quite a few people listening right now
• 22:05
  Speaker 2: who might have, say, five thousand dollars of debt and
• 22:07
  Speaker 2: are wondering if bankruptcy is a good idea because they're
• 22:10
  Speaker 2: struggling to pay their bills, put food on the table,
• 22:12
  Speaker 2: things like that. Can you give me a sense of
• 22:15
  Speaker 2: what level of debt most people would need to be
• 22:19
  Speaker 2: in or would find themselves in before they do actually
• 22:21
  Speaker 2: look into filing for bankruptcy.
• 22:23
  Speaker 4: Yeah, again, this is different for absolutely everybody. For some people,
• 22:27
  Speaker 4: five thousand dollars can be paid off in you know,
• 22:30
  Speaker 4: a year or two years, and for others that is
• 22:33
  Speaker 4: going to be absolutely crippling. And it is not for
• 22:36
  Speaker 4: me to say what is right or what is wrong.
• 22:39
  Speaker 4: I think we need to think about the ramifications that
• 22:41
  Speaker 4: we went through before, because obviously, if it's five grand,
• 22:44
  Speaker 4: can we find a way to pay that back. We
• 22:47
  Speaker 4: are definitely not doing this podcast to promote bankruptcy, but
• 22:50
  Speaker 4: more educate you around this. But if it's five grand,
• 22:53
  Speaker 4: could you pick up an extra job or a few
• 22:55
  Speaker 4: extra shifts at work? Could you do what Jess does
• 22:58
  Speaker 4: and sell a whole heap of things on pop or
• 23:00
  Speaker 4: Facebook market place and start smashing down the debt that way.
• 23:04
  Speaker 4: Could you do some side hustles, Could you jump on
• 23:06
  Speaker 4: an air tasker and do a few jobs. I'm not
• 23:09
  Speaker 4: here going okay, cool, like you're absolutely helpless. I think
• 23:12
  Speaker 4: that everybody has an ability to generate additional income. But
• 23:17
  Speaker 4: just as an fyi, as of January twenty twenty one,
• 23:21
  Speaker 4: so this year, my friends, if you are listening today,
• 23:24
  Speaker 4: the minimum debt amount that can trigger a bankruptcy is
• 23:27
  Speaker 4: actually ten thousand dollars, so you do need to be
• 23:30
  Speaker 4: in a little bit more significant debt. But again, if
• 23:34
  Speaker 4: it was ten grand, I'd really be trying to hustle
• 23:37
  Speaker 4: my way out of that situation and working out the
• 23:40
  Speaker 4: time on that, because don't forget that bankruptcy sticks around
• 23:44
  Speaker 4: for a minimum of three years and one day. So
• 23:47
  Speaker 4: if you could get out of debt by creating an
• 23:50
  Speaker 4: agreement or a plan or a way to get out
• 23:52
  Speaker 4: of that in less time than that, I would argue
• 23:54
  Speaker 4: that's a really great way to avoid going bankrupt because,
• 23:58
  Speaker 4: as I said before, it sticks around and you do
• 24:01
  Speaker 4: go on that register forever, and it does impact your
• 24:03
  Speaker 4: ability to get a mortgage and say for a home,
• 24:06
  Speaker 4: and I think it's really important to understand that. But
• 24:09
  Speaker 4: as I said before, I've met people in very deep
• 24:12
  Speaker 4: debt before where bankruptcy just makes sense because you do
• 24:15
  Speaker 4: the numbers and you work it out and you're like,
• 24:17
  Speaker 4: oh my gosh, I'm so sorry, my friend. But like,
• 24:20
  Speaker 4: if we did this and we started paying it back
• 24:22
  Speaker 4: today at the amount that they're asking you to pay
• 24:25
  Speaker 4: it back, it's going to take thirty plus years. And
• 24:27
  Speaker 4: they go, oh, I can't, I can't do that. That's
• 24:29
  Speaker 4: so overwhelming, and I get it, and that's when I
• 24:31
  Speaker 4: think I would start considering something like this. Yes, you
• 24:35
  Speaker 4: can absolutely consider it for less money. As I said before,
• 24:38
  Speaker 4: the minimum amount is ten grand, but I really would
• 24:41
  Speaker 4: be trying to avoid it as a first step instead
• 24:44
  Speaker 4: of burying our heads in the sand.
• 24:46
  Speaker 3: I promise you.
• 24:47
  Speaker 4: In twenty twenty one, it is so easy to find
• 24:51
  Speaker 4: additional side hustles or ways to generate income that don't
• 24:55
  Speaker 4: require any skill, like it is sometimes about running errands.
• 24:58
  Speaker 4: Like I actually have a girl I'm not going to
• 25:00
  Speaker 4: name her, but she's a wizard and I know she
• 25:02
  Speaker 4: listens to this podcast and she actually started cleaning houses
• 25:06
  Speaker 4: on the weekends because she was like, oh my gosh,
• 25:08
  Speaker 4: I've got myself into so much personal debt that that
• 25:12
  Speaker 4: was her way of getting out of it. And I
• 25:14
  Speaker 4: was so proud of her because also every single time
• 25:17
  Speaker 4: she cleaned a house, she was so proud of herself
• 25:20
  Speaker 4: because she knew what that money was going towards, and
• 25:22
  Speaker 4: she felt like she was really changing her life and
• 25:25
  Speaker 4: changing her money story. And I just I love that
• 25:28
  Speaker 4: as well. I don't think it's about shaming what the
• 25:30
  Speaker 4: job is. I think it's about embracing it and being like,
• 25:32
  Speaker 4: oh my.
• 25:33
  Speaker 3: Gosh, what a hustler.
• 25:34
  Speaker 4: I love that, like it's something that we can all do,
• 25:37
  Speaker 4: if that makes sense.
• 25:39
  Speaker 2: Yeah, And more power to those people who are taking
• 25:41
  Speaker 2: on jobs that are different from what maybe they do
• 25:43
  Speaker 2: in their day job to make whose ends me or
• 25:45
  Speaker 2: to make that change in their life. I think you
• 25:48
  Speaker 2: should be taking a lot of pride in your commitment
• 25:50
  Speaker 2: and your dedication, and even if you're filing for bankruptcy,
• 25:53
  Speaker 2: if you've come to the end of the line and
• 25:54
  Speaker 2: that's the choice that you have to make, be proud
• 25:57
  Speaker 2: of taking control and doing it.
• 25:58
  Speaker 3: Yeah, exactly, you and.
• 26:00
  Speaker 2: I guess before we head off, I just wanted to
• 26:02
  Speaker 2: ask you v you know, with all of these kind
• 26:05
  Speaker 2: of more heavy things that we've spoken about. And you know,
• 26:08
  Speaker 2: with any large amount of debt or financial stress, there's
• 26:12
  Speaker 2: going to be a really significant mental toll. We know
• 26:14
  Speaker 2: there's a direct link to mental health and financial distress.
• 26:18
  Speaker 2: Is there anything you can pass along to our community,
• 26:21
  Speaker 2: to anyone who might be struggling financially or might be
• 26:24
  Speaker 2: considering bankruptcy, what would you say to them?
• 26:27
  Speaker 4: So first things first, to do your research, work out
• 26:29
  Speaker 4: if it is the right decision for you. It is
• 26:31
  Speaker 4: not a get out of jail free card from monopoly,
• 26:34
  Speaker 4: my friends. It is not as easy as that. But
• 26:37
  Speaker 4: if you've come to the conclusion that you need to
• 26:38
  Speaker 4: file for bankruptcy, I'm so bloody proud of you. I
• 26:42
  Speaker 4: am so proud that you have made that decision and
• 26:44
  Speaker 4: we have gotten this far, and it is something that
• 26:46
  Speaker 4: you are doing for future. You make sure that it
• 26:49
  Speaker 4: doesn't happen again. Put yourself in a position where you go, yep, cool,
• 26:52
  Speaker 4: this is the clean slate that I deserve, and I
• 26:55
  Speaker 4: am going to take every opportunity to educate myself and
• 26:58
  Speaker 4: put myself in a better financial position. But listening to
• 27:01
  Speaker 4: episodes like this is a really great start doing your
• 27:04
  Speaker 4: own research. The Australian Financial Security Authority has lots of
• 27:07
  Speaker 4: information and similarly, talking into a counselor from our friends
• 27:11
  Speaker 4: at the National Debt Helpline can be really useful if
• 27:14
  Speaker 4: you need to talk to someone about your options. I
• 27:16
  Speaker 4: genuinely think if you are seriously considering bankruptcy as a
• 27:20
  Speaker 4: viable option for you, that it would be a no
• 27:23
  Speaker 4: brainer to pick up the phone and talk to the
• 27:25
  Speaker 4: National Debt Helpline.
• 27:26
  Speaker 2: And they are free. Will pop their information in the description.
• 27:29
  Speaker 3: Yes, talk to them.
• 27:30
  Speaker 4: They are so kind, they are so knowledgeable. They are
• 27:33
  Speaker 4: going to make sure that you are making the right
• 27:35
  Speaker 4: decision for you and assist you in that process. I
• 27:37
  Speaker 4: promise you you do not have to do any of
• 27:40
  Speaker 4: these things alone. Obviously we'll link them in the show
• 27:42
  Speaker 4: notes as just said before, but please don't feel like
• 27:46
  Speaker 4: you need to be super broke or a certain type
• 27:49
  Speaker 4: of person to be calling these places.
• 27:51
  Speaker 3: Like if I was.
• 27:52
  Speaker 4: In that situation, those are the people I would personally
• 27:55
  Speaker 4: reach out to, like I have so much respect for
• 27:58
  Speaker 4: them and what they do is so so special. And
• 28:02
  Speaker 4: then if you're all set and you've decided that that's
• 28:04
  Speaker 4: what you're going to do, then all you need to
• 28:06
  Speaker 4: do is head to the Australian Financial Security Authority or
• 28:09
  Speaker 4: the AFSA website and submit a bankruptcy form online and
• 28:14
  Speaker 4: you just need to set up an account to get started.
• 28:16
  Speaker 4: It's important to remember to detail every single little part
• 28:20
  Speaker 4: of the debts and why you're applying for bankruptcy, and
• 28:23
  Speaker 4: if you do forget, let your.
• 28:24
  Speaker 3: Trustee know as soon as possible.
• 28:27
  Speaker 4: And then if your application is accepted, the AFSA will
• 28:30
  Speaker 4: send both you and your creditors that approve all in writing.
• 28:34
  Speaker 4: If not, you'll also receive written word from the AFSA
• 28:38
  Speaker 4: detailing the reason why. So they'll absolutely let you know
• 28:40
  Speaker 4: if you're approved or not approved, always in writing. Also
• 28:44
  Speaker 4: really important, you can select a private trustee or if
• 28:48
  Speaker 4: you don't have that, they will select one for you,
• 28:51
  Speaker 4: and as we've mentioned, they're going to work really closely
• 28:53
  Speaker 4: with you and your creditors throughout this entire process. Like,
• 28:57
  Speaker 4: this is not a process that you have to go
• 28:59
  Speaker 4: through alone. Police don't think it is at all. It
• 29:02
  Speaker 4: is absolutely not something that anyone has to do alone.
• 29:05
  Speaker 2: Okay, amazing. Like we said, check out the show notes.
• 29:08
  Speaker 2: We'll have as many resources as we can think of down.
• 29:10
  Speaker 3: There, down pack it for their friends.
• 29:13
  Speaker 2: Absolutely, the National Debt Helpline, we talk about them all
• 29:16
  Speaker 2: the time. They're really fantastic and they're a free resource.
• 29:19
  Speaker 2: And if you're in a lot of debt, utilizing any
• 29:21
  Speaker 2: of those free resources that you can get your hands on,
• 29:23
  Speaker 2: I think is a really fantastic thing to do.
• 29:25
  Speaker 3: Thanks Jess.
• 29:26
  Speaker 4: But as always, just before we head off, we'd like
• 29:29
  Speaker 4: to acknowledge and pay respect to Australia's Aboriginal and Torro
• 29:32
  Speaker 4: Strait islander people's. They're the traditional custodians of the lands,
• 29:36
  Speaker 4: the waterways and the skies all across Australia. We thank
• 29:39
  Speaker 4: you for sharing and for caring for the land on
• 29:41
  Speaker 4: which we are able to learn. We pay our respects
• 29:44
  Speaker 4: to elders past and present, and we share our friendship
• 29:47
  Speaker 4: and our kindness.
• 29:48
  Speaker 2: The advice shared on She's on the Money is generally
• 29:51
  Speaker 2: nature and does not consider your individual circumstances. She's on
• 29:54
  Speaker 2: the Money exists purely for educational purposes and should not
• 29:57
  Speaker 2: be relied upon to make an investment or a financial decision,
• 30:00
  Speaker 2: and we promise Victoria Divine is an authorized representative of
• 30:03
  Speaker 2: Australia Pacific Funds Management Proprietary Limited ABM three four one
• 30:07
  Speaker 2: three two four six three two five seven, afs L
• 30:10
  Speaker 2: three three nine one five one.
• 30:12
  Speaker 4: OK, you'd We'll see you next week. Guys.
• 30:15
  Speaker 2: Bye,