Bankruptcy is considered by many as a “last resort”. If you are experiencing genuine financial difficulties then there are alternatives to bankruptcy. Bankruptcy results in serious consequences. A bankruptcy usually lasts for 3 years however if you fail to co-operate with your trustee this can be extended to a maximum of 8 years.

Under bankruptcy you may still have to pay back some debt such as child support, maintenance and debts incurred by fraud. You can choose to go bankrupt for any amount; however your creditors can force you into bankruptcy for as little as $2,000.

However, many people can benefit from bankruptcy and in some cases is the right option for them. Although it is important to know what you are getting yourself into before you decide to go bankrupt. Some consequences of bankruptcy include:

• Bankruptcy restricts you from leaving Australia without written permission from your trustee even if it is for a holiday.
• Your pay may be garnisheed.
• Your name will be placed on a credit reference for 7 years even if your bankruptcy has been discharged.
• Your non-exempt assets (including your house, shares, land and investments) belong to your trustee and can be sold at any time without your permission.
• You are only allowed to keep a limited amount of belongings and any non-exempt assets you receive during your bankruptcy become the property of the trustee.
• Your job opportunities may be affected, especially with jobs handling money or where a license is required (e.g. security industry, real estate, licensed builder etc). □ You cannot be the director of a company or hold certain public positions without permission.
• If you trade under a business name other then your own, you may have to tell everyone you deal with that you are an undischarged bankrupt. □ You may also loose the right to take and/or continue most legal actions.
• You may also be asked to give up your passport to your trustee.

You may feel that your options have been restricted and that you need to go bankrupt, however the reality is that many bankruptcies are avoidable.

If you would like to become bankrupt or to find out how you can avoid bankruptcy click here.