Monetary hardship might be unpredictable, unforeseen, and sudden. So, financial disasters are common, and a few reasons why people may experience them are:

  • Ill health
  • Loss of employment
  • Wrong use of credit cards 
  • Unprofessional decision making 

Escalating debt or failing to meet financial commitments might have negative impacts on individuals. At this point, you must quickly learn a brief on personal insolvency to get an insight into more information.

Welcome to this post that mentions the top frequently asked questions pertaining to personal insolvency:

FAQ 1: What is Personal Insolvency?

Personal insolvency describes an individual’s economic status. Especially, it’s when one is incapable of servicing personal debts during the time when they’re due. Note that personal insolvency remains limited to unsecured debts, including:

  • Unsafe personal loans
  • Credit cards
  • Due rent
  • Overdrawn bank accounts
  • Outstanding medical, accounting, and legal fees.

Note that failure to meet these financial commitments might not lead to bankruptcy. 

FAQ 2: Are Bankruptcy and Personal Insolvency Similar?

Personal insolvency is the legal alternative to the former one. However, bankruptcy denotes the time when one legally states they can’t repay debts. In short, it might affect the individual’s employment, income, and potential to obtain credit. Therefore, debt arrangement and PIA (or personal insolvency agreements) are the sheer bankruptcy alternatives.

FAQ 3: When Is Bankruptcy the Only Available Option?

Suppose the debts aren’t sustainable, and you cannot access alternative options. In such cases, bankruptcy might be the only available option. In short, bankruptcy is a legal procedure that declares you are unable to pay debts. During regular scenarios, people might stay bankrupt for three years and a day from the declaration time. 

  • Did You Know?

Most individuals are not aware that bankruptcy has two different classifications – involuntary and voluntary. The former encompasses the court that declares the individual bankrupt following an application of the organization or individual owing money. 

On the flip, voluntary bankruptcy prevents debts from mounting. In addition, being proactive offers them a chance to keep their valuable assets, such as a vehicle or property.

Coming back to the topic, you can avoid bankruptcy by consulting a professional team of insolvency practitioners.

FAQ 4: What Might be the Causes of Non-Business Related Personal Insolvency?

The prime causes of non-business-related personal insolvency are:

  • Ill health
  • Excess use of credit
  • Loss of income or unemployment 
  • Relationship breakdown or domestic discord 
  • Adverse legal actions
  • Liabilities because of the guarantees and more

FAQ 5: What Might be the Causes of Business-Related Personal Insolvency?

The prime causes of business-related personal insolvency are:

  • Economic conditions
  • Health conditions and other personal reasons
  • Lack of ability to run a business
  • Excessive drawings
  • Lack of capital
  • Excess interest
  • Seasonal conditions 
  • Unable to keep proper accounts and books
  • Incapable of collecting debts and more

Whether you’re struggling to pay the debts or in financial distress, consult a professional team that can assist you seamlessly. No wonder insolvency procedures are complex and require getting tailored to suit the scenario. Thus, selecting a competent insolvency practitioner is vital. The professional can help you accomplish the most promising outcome. That calls for the discussion of Insolvency Australia.

If you need advice for personal insolvency Australia, now is the right time to consult the team. Become debt free and avoid bankruptcy with the team’s advice and recommendations. Discover more about the company by consulting them at the soonest. Access the live chat with the appointed trustees.