Bankruptcy is a process designed to provide a fair and equitable outcome for all involved if an individual is unable to pay their debts. It gives the debtor instant financial relief and ensures that if there are any funds that can be put towards the debts, they are realised effectively and distributed evenly.
Declaring bankruptcy comes with many consequences, though, such as a record on your credit file and restrictions on overseas travel. Some careers can be affected by bankruptcy, and if you have any substantial assets such as a home, you may need to surrender them to your bankruptcy Trustee (subject to protected limits).
This is why bankruptcy should always be considered as a last resort. At Insolvency Services Australia, we strongly recommend that you explore all other options before coming to the decision to file for personal bankruptcy.
There were 29,514 personal bankruptcies declared in Australia between 2013 and 2014, with unexpected medical expenses and job losses being the most common cause of bankruptcy. Uncontrolled credit use, divorce and unexpected disasters came close behind. It is evident that the need for adequate education and knowledge of the legal alternatives to bankruptcy is becoming increasingly important.
Legal alternatives to avoid bankruptcy include:
Receiving the right information and advice on the options available when you are experiencing financial difficulty is essential to making an informed decision. Whether it is bankruptcy that is best for you, a Debt Agreement or Personal Insolvency Agreement, or even some simple budgeting advice – you need to feel comfortable that you have made the right decision for you and your household.
For more information on the personal insolvency services provided by Insolvency Services Australia, call us for impartial and obligation-free advice on 1800 003 883.