Bankruptcy should be a last resort for people who are experiencing personal financial difficulties. However, it can be difficult to know when is the best time to file for bankruptcy. If you are asking yourself, “Should I declare Bankruptcy”, consider the following questions:

 

Have I explored every other possible alternative?

You need to ensure that you have thoroughly investigated all other alternative routes if you are wondering, “Should I declare Bankruptcy”. There may be other viable personal debt solutions that can help you get out of debt without having to face the consequences of bankruptcy such as by entering into a Debt Agreement or Personal Insolvency Agreement.

Australian Bankruptcy Services are equipped with both a Debt Agreement Administrator (for Debt Agreements) and a Registered Trustee (to propose a Personal Insolvency Agreement), so we can help you avoid bankruptcy with an alternative arrangement.

 

Am I qualified to declare bankruptcy?

There are two ways in which someone can become bankrupt:

1. One of your creditors can make you bankrupt; or

2. You can voluntarily make yourself bankrupt.

If you choose Voluntary Bankruptcy, then you need to complete the Debtor’s Petition and the Statement of Affairs form. Both then need to be lodged with the Australian Financial Security Authority (AFSA). However, there are several circumstances in which AFSA can reject your application such as if you are not a permanent resident of Australia with a current Australian address or if you are not insolvent and AFSA believe that you have the capacity to pay your debts within a reasonable amount of time.

 

Am I prepared to lose some assets in the process?

Contrary to belief, you will not lose every asset that you own when becoming bankrupt. However, there are certain limitations as to what assets you will be allowed to keep so if you are asking yourself,” Should I declare for Bankruptcy”, then it is important that you know what assets you risk losing and which ones you can keep

For example, when you become bankrupt, you will be allowed to keep most household goods, with the exception of luxury items and your car if its value falls under the stipulated threshold. If your car is above it, however, then you may risk losing it.

 

Am I prepared to be bankruptcy for three years?

If you are wondering, “Should I declare Bankruptcy”, then it is important to bear in mind that Bankruptcy usually lasts for three years from the date your forms are accepted by AFSA. In certain situations, if your Bankruptcy Trustee lodges an objection to your discharge, then this can be extended to five or eight years.

 

Considering Bankruptcy? Talk to an experienced consultant for professional advice personally tailored to your situation such as Australian Bankruptcy Services. ABS offer expert Bankruptcy advice on our toll-free hotline. We are open 24/7 so contact us at your own convenience on 1800 462 767.