Bankruptcy is considered a last resort for those who are experiencing financial struggles.

While Bankruptcy is not as bad as it is made out to be, there are several things that you need to know before filing for Bankruptcy.

1. It does not discharge all your debts

There is a common misconception that Bankruptcy means that all your debts are written off. However, this debt solution only repays some of your debts, depending on several factors such as whether it is a secured debt or unsecured debt.

Some debts that are not covered by bankruptcy include court fines, child support and maintenance and any debts incurred after the bankruptcy period begins.

2. Your credit will be affected

If you apply for credit over a set amount, you must notify the credit provider of your bankruptcy. It will also show up as a negative mark on your credit report potentially affecting your chances of getting a loan or mortgage in the future, although this is cleared after 5 years.

3. Your employment may be affected

There are certain jobs and positions that do not allow people who have been bankrupt to work in. This does depend on the State that you are in but some jobs include:

Gaming room employees
Justice of the Peace
Police Officer
Member of Parliament
Superfund trustee; and
Tax agent

4. Your ability to travel overseas will be restricted

While it is still possible to travel overseas while bankrupt, you first need to obtain permission from your bankruptcy trustee first. You also need to return to the country at the date given.

5. Your trustee may sell your assets

While you are able to keep some essential assets such as ordinary household goods, your trustee has the right to sell other assets such as your house.

6. Bankruptcy lasts for 3 years and 1 day

In a typical situation, the bankruptcy period usually lasts for 3 years and 1 day from the day Australian Financial Security Authority accepts your application. However, in certain circumstances, your trustee can lodge an objection to extend the Bankruptcy period for up to eight years.

If you are considering filing for Bankruptcy, then it is important that you speak to a professional so that you gain a thorough understanding of it. Call our professional and friendly debt consultants at Australian Bankruptcy Services for free, expert advice on 1800 462 767.