Hi Trisha

In times like this I can understand many Australians struggling with unmanageable debts and causing financial stress. However, not to stress there are options available to you when facing such a situation. First and foremost, The Australian financial security authority website has got a range of resources available to people considering insolvency which I think you will find useful. The first step of any repayment of debt is to ask for help and you have done that which is fantastic.

Insolvency is an extreme measure that is an option if your debt cannot be repaid, However sometimes it doesn’t get rid of the issue it just makes it worse depending on how your personal family assets structured, trading insolvently could mean the business is not liable for the debts however creditors will then target the personal assets under your name, which is generally a worse situation than the business.

The first step is talking to your creditors about meeting the required repayments and setting up payment plan to make it more achievable for you to pay in a reasonable time that suits you and the creditor. This allows for more time for the debt to be repaid. Also, it may be beneficial for you to negotiate a lower interest rate as well. Talking to debt collectors early on in the process about this is a good way to manage the intimidating requests as both the creditor and you have an arrangement that could be more flexible and more achievable rather than the hard and fast rule of asking for the money upfront.

In any situation like this your accountant is going to be your best friend as they have a great understanding of the way your business trades and what profit and loss is occurring and what assets could be disposed of to repay the debt.

If there is no chance of coming up with a negotiated repayment plan claiming hardship maybe advantageous for you. Debt collectors are required by law to consider hardship in a situation like this, I suggest you figure out how much you can afford to pay and then contact the debt collector about hardship and what they can do about it. I suggest you explain the reasons why you cannot pay anything over that what you can afford. It is important that you keep full discussions on a file if this proceeds to litigation it’s important to have these handy.

Another option for you is consolidating the debt taking out a personal loan to get the creditors off your back, however this is of course is subject to its own lending criteria but the overall theory that it can help reduce the stress and can be secured against your home or any other existing loans.

On the other hand if time is not on your side in this scenario you can always apply for a temporary debt protection which is a temporary relief from enforcement action by a creditor this gives you a six month protection period where you can gather your thoughts and come up with a plan to repay the debt once that six month ends. Unfortunately, creditors can still use this to make you bankrupt under the act of bankruptcy, and they can still try to recover any assets you hold such as a house under mortgage. This is purely designed to give you more time to repay the debt.

The website below is a good information source on what options are available, there are many links to access free financial counselling and other support services.