Are you considering Bankruptcy? The first thing you should know is that your situation is not uncommon. Current statistics have the average number of Australians declaring Bankruptcy in a year at close to 20,000. The questions you are asking right now have been asked by thousands of people before you, and the reasons for it are multitude. People lose their jobs, become ill, their relationships or businesses fail. And sometimes they have simply fallen into the trap of easy credit applications and insidious interest rates, and found themselves with no other way out. Bankruptcy exists for a reason, which is to provide the most beneficial outcome possible for both creditors and debtors when people find that they cannot service their debts.

But is it right for you?

The first thing to consider is your financial situation. You should ask yourself the question: “Am I insolvent?” To be insolvent means to be unable to pay your debts as they fall due. Begin by working out a budget, preferably on a monthly basis, as that is how often most payments are due. Work out how much you have coming in, and how much you need for rent/mortgage, food, utilities, car payments and the like. Now apply what is leftover to your debts, your credit cards and/or personal loans – is there enough to cover your monthly debt repayments? Without using your credit facilities? If not, you are insolvent, and you definitely need to do something about your debt.

Now consider your asset and employment situation. Do you have a home with available equity? Or maybe a car that has been paid out in full? Is there a chance that Bankruptcy could affect your employment, either because you work for yourself as a business or company owner, or have a clause in your contract saying that you cannot go Bankrupt? If so, you may want to talk to someone about your alternatives to Bankruptcy, such as a Debt Agreement or Personal Insolvency Agreement, or maybe approach each of your creditors individually and ask if they can assist you.

But if you do not have any assets, or an employment situation that could be hindered by Bankruptcy, it may actually be the right decision for you. Declaring Bankruptcy is never a pleasant feeling, and there will be an effect on your credit rating. If you are insolvent, though, you need to take some form of action to manage your debts, for chances are it is only going to get worse.

If you would like to speak to an expert before you decide to declare yourself bankrupt, we operate a toll free advice line which is open 7 days a week. All calls are free, entirely confidential and if required, anonymous. Our toll free telephone line is open 24 hours everyday / 7 days a week. Our call now on 1800 462 767.