Should I Apply for Bankruptcy? Think Again.
To seek out debt solutions families across Australia have to make this very difficult and consequential decision, do I apply for Bankruptcy and seek immediate debt relief? Or are the long term consequences going to put me into deeper problems? This article aims to spell out the pros & cons of Bankruptcy to make it easier for you if your considering this option and assist you with debt repayments.
What is Bankruptcy?
Bankruptcy is a legal process that will conditionally release you from some or all of your debts.
Broadly speaking your unsecured debts (credit cards, personal loans etc) will be included in the Bankruptcy, however some debts are not covered and will need to be paid by you, they include child support, fines, secured debts on assets and others.
- You will be permanently listed on the National Personal Insolvency Index (NPII Register) as a bankrupt. This listing is forever and may impact on your ability to borrow money for many years to come.
- Everyone has a credit rating with various agencies, the most common of which is VEDA. If you apply for Bankruptcy then your credit report will be listed and it will be impossible to borrow further money outside your Bankruptcy terms.
- Your assets could be seized and sold to pay your creditors.
- If you earn over a certain income threshold then it may be garnisheed to pay the bankruptcy estate for the term of the bankruptcy (usually but not always 3 years), this means a portion of your regular income is diverted to go towards your estate.
- Generally, you cannot be a director of a company.
- You cannot travel overseas without the Trustees permission.
- It can be very expensive
Should I or shouldn’t I?
Never apply for Bankruptcy for debt relief as a knee jerk reaction to an immediate financial crisis, the Laws governing Bankruptcy is complex and cleverly written to endorse lawful seizure of assets you may assume to be protected.
Think about the consequences, seek out legal advice for further confirmation and after weighing up the benefits verse the costs then make your decision for debt assistance.
This article was written by Laurence Hugo of Credit Mediation Service Pty Ltd, professional Debt Negotiators. For more information on debt mediation and how we can help contact Laurence on [email protected] or 02 9899 6100.
This article is not intended for legal advice, if you require legal guidance on the matter of Bankruptcy please seek out a professional in the field for further guidance. For more information, go to: www.afsa.gov.au