Melbourne woman to declare bankruptcy over $150k debt at just 30

A woman who owned a Melbourne bar that went bust has revealed she is in the “scary situation” of having to file for bankruptcy as she faces $150,000 in debt.

Liv Franklin was the owner of Follies, a vegan antipasti bar in Fitzroy, which closed down at the end of March.

She said there were “so many sh***y implications” about the bar’s failure but the biggest impact will be becoming a “bankrupt girly” at just age 30.

However, she said she wanted to debunk what this meant as many people still saw bankruptcy as taboo.

“I’ve been doing heaps of work to get different advice and find out what it actually looks like because it’s really scary,” she said in a TikTok video. “But the more you know about it, the less scared I feel.”

The former bar owner explained that bankruptcy would last for three years and while unsuprisingly it would have serious lending and credit implications, she also revealed another consequence that “really freaked” her out.

“You have serious credit implications for five years and then it stays on your record forever, essentially, but I probably will be able to buy a house again, if I want to, in like 10 years,” she said.

Bar owner reveals she's declaring bankruptcy over $150k

“While you’re in the three year period, you can’t be the director of a company but don’t worry, this isn’t happening again anytime soon.

“You have to get permission to travel internationally. I was really freaked out about this, but I’ve spoken to a few people and it’s actually not so bad. You do just have to apply but they can’t really refuse you unless they have a good reason.”

Ms Franklin said she had to deal with a lot of older people in her life who told her to avoid bankruptcy “at all costs” but her financial counsellor told her this is a “generational divide”.

She added she has to wait to sell the business and get a job before she can officially go bankrupt.

“In the next couple of weeks I’m really just trying to sell the business still, it’s gonna to be for absolute pennies, but at least it’s out of my hands and somebody else will take over the lease and then I’ll start to move forward and I’m gonna be bankrupt girly at 30,” she said. “That’s super fun.”

Finder’s personal finance expert Sarah Megginson told that Liv’s situation is really fascinating and it’s so admirable that she’s chosen to share her experiences publicly.

“It really speaks to the trend of loud budgeting at the moment, where people are more openly discussing their financial struggles,” she noted.

So many small business owners will relate to her struggle. It’s really tough running a hospitality business at the moment; I owned a restaurant for two years, during covid, and I don’t think I ever understood or appreciated just how hard it is until that experience.

“Bankruptcy has evolved over time and while it’s still quite a drastic solution to your financial problems, it’s not as strict or limiting as it used to be. Liv mentions a generational divide in the response to her going bankrupt and that’s really understandable.

“In the past, when you went bankrupt, it really did limit your options for many, many years into the future. Your credit file was impacted for longer and the period you were bankrupt was longer, too.

These days, the period of bankruptcy lasts for three years and one day, explained Ms Megginson.

“After that, you’re discharged and credit reporting agencies will keep a record of your bankruptcy for five years from the date you became bankrupt or two years from when your bankruptcy ends, whichever is later,” she said.

“During that time, there’s a number of impacts: your wages are likely to be garnished to repay part of the debts you owed, and your trustee has the right to sell your assets if you own any. There are some exceptions to this; if you own a car, for instance, it can be quarantined from being repossessed if it’s valued at up to $9100.

“In terms of the impact on young Australians, it also affects your ability to travel, as you’re not allowed overseas when you’re bankrupt unless you have permission from the government.

“The prospect of this can be a bit daunting, but if your situation is so dire you’re contemplating bankruptcy, travelling overseas in the next few years should possibly be a bit lower on your priority list.”

Ms Franklin also dived into the management of bankruptcy and said while it can be done through a government agency called the Australian Security Financial Security Authority but she had been advised not to go with it.

“I’ve been told probably don’t do that because then you just are dealing with a government agency. It’s like calling Centrelink anytime you need to ask a question or plan to travel,” she said.

“You can pay a small amount of money through a private trustee, which is what I will do. And then you have like a direct point of contact that knows you and notice your situation and can make decisions based on your specific circumstances. Because as you can imagine, a lot of these bankruptcy rules are really like made for big fish. Not not little of me he only owes you know $150,000 in total.”

It comes as the country’s bankruptcy regulator has warned of the rising number of personal insolvencies affecting vulnerable Australians, as small business owners struggle to make ends meet due to mounting debts.Australian Financial Security Authority chief Tim Beresford said personal insolvency was “rising,” with rates increasing from about 10,000 last year, to 12,500 this year, and 15,000 next year.

Mr Beresford said most Australians facing insolvency were “extremely vulnerable,” with less than $50,000 in liabilities.

“One credit card, one personal loan, five buy now pay laters, and five bills, that’s it,” he said.

“Often those people (are) sole traders … often those people suffer vulnerabilities beyond financial fundamentals.”

December quarter personal insolvency figures from AFSA revealed there had been a 23.4 per cent increase in insolvencies for the same period year-on-year, from 612 in December 2022, to 2608 in December last year.

Business-related personal insolvencies made up the bulk of insolvencies (27.3 per cent).

– with Jessica Wang

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