Filing for bankruptcy in Australia is a huge decision that shouldn’t be made lightly. The consequences can be significant and long lasting, and I’d always recommend speaking with a family lawyer to make sure that you understand them fully.
With this in mind, I’ve put together this article to give you a brief insight into the ways that filing for bankruptcy can affect you and your family in both the short and the long term. But first, let’s have a quick look at what bankruptcy is and why you might consider it.
What is bankruptcy?
Legally, bankruptcy is a process which involves your debts being removed, allowing you to make a fresh start. You can go bankrupt voluntarily under some circumstances, but you can also be forced to go bankrupt if you owe money that you can’t repay.
Before entering bankruptcy you should consult with a legal professional, such as ohfamilylaw.com.au, to determine whether or not it’s actually the best choice for your situation. The consequences of becoming bankrupt are far reaching, and include:
If you go bankrupt you may not be able to travel overseas
This is a very important consideration for those with close family who live in or are from a foreign country. Unfortunately, you will have to request permission to travel overseas if you declare bankruptcy, which can significantly reduce your freedom. It’s important to note that this permission won’t always be granted.
You might not be able to get a loan in the future
Declaring bankruptcy might seem like a good option to free you from your debts, but it has a major consequence that could affect you and your family well into the future.
If you become bankrupt you need will probably have trouble getting loans in the future. This could impact your ability to buy a house, a car, or even to borrow money to send your children to school.
You might lose your assets
When you declare bankruptcy, you have to declare any assets that you have. You will be appointed a trustee who will manage your bankruptcy, and they will have complete control over your assets. They will be able to sell major assets to pay off your debts, including your house and vehicle.
Your income could be affected
Once you’ve declared bankruptcy, you will be confined by quite a low income threshold. Your bankruptcy will last for 3 years and one day from the date you declare it, and you will be forced to make repayments if you exceed the income threshold during this time.
Final word: Is bankruptcy a good option?
Ultimately, going bankrupt isn’t usually the best option. Depending on your situation, you will probably be better off speaking with the people and companies that you owe money to and seeing if you can come to a peaceful resolution.
Otherwise, the consequences can be significant and far-reaching. Make sure that you speak to a lawyer before filing for bankruptcy, because they will be able to advise you and help you choose the best course of action.