In our years of helping Australians with their personal debt problems, we have yet to come across anyone who was particularly happy about the choice to declare Bankruptcy. Aside from the actual process, which can feel a bit invasive to some, there is also the social stigma that comes with Bankruptcy, which can leave people feeling unjustifiably ashamed. This sense of shame becomes even worse when one worries about how their own Bankruptcy is going to affect their personal relationships. The good news, though, is that your Bankruptcy needn’t affect the people who are close to you, or if it does, it may only be minimal. Bankruptcy in Australia is a sole act, something that can only be done by individuals, not couples, and as such it really only affects the individual. Your partner/family member/friend will not receive a mark on their credit file because of your Bankruptcy, or have any of your Bankruptcy restrictions placed on them.The only ways in which your partner/family member/friend would be affected by your bankruptcy are if:

• You have joint debts together – they will not be penalised in any way, but they will become solely liable for the entire amount of the joint debt; the banks do not split the amount owing in half.
• You have jointly owned assets with equity available in them – even if an asset is held in two names, if there is equity available in it, it will be sold. The non-Bankrupt party would have their share of the equity returned to them in cash, and your share would become a part of your Bankrupt estate. Alternatively, the non-bankrupt party could make an offer to purchase your share in the asset from the bankrupt estate.
• You are in business together – being Bankrupt can affect the way that you do business.

If you need to declare Bankruptcy, you need not worry that it is going to directly affect the financial situations of those close to you. Bankruptcy, on the whole, is a completely individual and personal matter. But depending on your circumstances, there may be some side effects of Bankruptcy that will inadvertently impact people with whom you share assets, a business, or joint liabilities. An experienced debt advisor will be able to explain to you all of the consequences of declaring Bankruptcy and how they relate to your individual situation. Call us today on 1800 462 767 for free and impartial advice on how Bankruptcy might affect you and your loved ones.

Section 177 of the Bankruptcy Act states that a Trustee should also have regard for any lawful direction as resolved by creditors at a meeting of creditors.

If you or your spouse are contemplating bankruptcy and you want to understand how bankruptcy my affect your personal relationships, then call us today on 1800 462 767 to discuss your options.

All calls are free, entirely confidential and if required, anonymous.