Often times, when one realises their insolvency, one needs time to consider all their options for dealing with their debt. In such cases, filing a DOI (or a Declaration of Intention) with the AFSA, can provide temporary relief from the creditors of unsecured debts, for a period of 21 days.
There are certain positive and negative implications of filing a DOI.
Positive
- Once a DOI is lodged with AFSA, and if the same is accepted, then the AFSA informs all your creditors about your financial position, and you are given protection for 21 days against the demands of your unsecured creditors.
- If a DOI is filed, the same is not published on the permanent National Personal Insolvency Index (NPII).
- After the period of 21 days, you do not become bankrupt automatically. And in case you file for bankruptcy, your creditors cannot pursue you for your debts.
Negative
- You are not granted any protection against your secured debts. Such creditors are free to pursue you to recover their debts and to take actions against you, as they deem fit.
- Even though the creditors for your unsecured debts, cannot demand money from you, but once you file a DOI, they can apply to the court to declare you bankrupt. In fact, filing a DOI, is legally considered as an act of bankruptcy, and creditors have the right to commence legal proceedings against you.
- The period for protection cannot be extended beyond 21 days. In fact, it can end before 21 days, if within such time, a creditor files a petition in the court to declare you bankrupt.
One is eligible to file a DOI if:
- He/she has not already declared bankruptcy
- He/she is not in a debt agreement or a PIA
- A creditor has not already commenced legal proceedings against him/her to declare them bankrupt
- The AFSA has not already accepted a DOI from him/her in the last 12 months
- He/she has a residential or business connection in Australia
Also, there is no set minimum or maximum amount of debt, to become eligible for filing a DOI. Plus, the fees for filing a DOI with AFSA is nil.