My first attempt

It took four attempts for me to achieve bankruptcy.

The first time I approached a small, local debt consolidation consultancy, I won’t name them here. It was owned by someone I knew and I thought long and hard about using them simply because I was worried about the confidentiality issues. But I figured it’s the same as any client/consultant relationship and I had heard this company was very good. I made an appointment and went in for a consultation.

At this time I was hoping that I might be able to get a Part IX Debt Agreement instead of filing for full bankruptcy. What’s the difference between a Part IX and Bankruptcy? But I learnt from the consultant that this would not be an option. I had thought that because only the banks were actually pursuing me, they were the only creditors I would have to consider in my insolvency. Looking back this was pretty naïve but I was putting my own particular spin on the definition of insolvent:

“A person is solvent if, and only if, the person is able to pay all the persons debts, as and when they become due and payable”
s95A Corporations Act 2001

I figured I didn’t have to include the loans that weren’t yet due and payable ie. The big ones I had personally guaranteed. Wrong!

In the end my total debt including the guarantees was over $400,000 and the limit for a Part IX is $80,000. I was definitely going bankrupt. Completely, fully and utterly bankrupt.

What I didn’t know: If you have a joint debt with someone eg. You and your spouse are both listed on your mortgage, or you and all the other Directors in your company sign a personal guarantee, for the purposes of applying for bankruptcy, or even a Part IX, you are liable for the full amount, not just your “share” of the loan.

Okay. Decision made. I was in the right place, with professionals. How hard could it be? I thought going bankrupt would be like falling off a log. I imagined that as the words passed from my lips, a supernatural debt delegation was being summoned from the deep, I’d sign a lengthy contract that I would be too disparaged to read and my soul would be forthwith dispatched via overnight courier to credit hell.

Not quite. Unbeknownst to me, the company I was dealing with was in the process of being sold. Somehow, in the confusion of the handover, their phones stopped working and my case fell off their database - they just never got back to me. I rang and rang and they simply never got back. The banks were chasing me for payments on my Credit Cards and personal loan and I was referring them to this company and nothing was happening! - to be continued...