There is such a social stigma around bankruptcy that many people do not realise that there are benefits to it. Bankruptcy was not designed to punish those who cannot pay their debts in full, but to ensure a fair outcome for all concerned whilst providing protection for the indebted person from harsh collection activity. Whilst there are undesirable aspects to the bankruptcy process, many people actually find that the good can outweigh the bad.
No one makes the choice to declare bankruptcy unless it is absolutely necessary. The decision usually comes when repeated demands for payment, both on the household budget and from creditors, become too much. When you become bankrupt you are released from payment of your provable debts, that is, your credit cards, personal loans and the like. If you have been suffering under unmanageable debt, the relief of being released from it can be immense. Those creditors are no longer able to demand payment from you, meaning that the stressful letters and phone calls will stop too.
Another major benefit of declaring bankruptcy is that it provides an end to your provable debts. Many people come to us for help after realising that if they were to continue on the way that they are, they will probably pay their debts in full in about 20-30 years – that’s as long as a mortgage, but with no benefit! Declaring bankruptcy wipes your slate clean, and allows you to become financially rehabilitated and to learn to live without credit.
Many people who call us soon realise that the benefits of bankruptcy are, for them, far greater than the inconvenience of its negative consequences. For those for whom bankruptcy will involve substantial hardship, such as through the loss of a home, we often recommend looking into a legally binding settlement arrangement such as a Debt Agreement or a Personal Insolvency Agreement instead. If you are struggling with debt and have been considering bankruptcy, call the Australian Bankruptcy Service today on 1800 462 767 – you may find that we can help you to avoid it, or that it won’t be as bad for you as you first thought.