If you are in personal debt and find that you are falling behind on your payments, then you may have started exploring debt solutions. One possible option is to declare for bankruptcy. However, bankruptcy has serious and long-lasting ramifications so it is important that you completely understand the consequences of bankruptcy before you act.
- You cannot change your mind
One of the consequences of bankruptcy is that once you file your application, you cannot change your mind. This is why it is crucial that you are 100% certain that this is your only option to get out of debt.
- You may not be released from all debts
Bankruptcy does not distinguish every single debt that you may have under your name. Debts that you will still owe include any student loans, maintenance payments such as child support or fines.
- Bankruptcy will last for 3 years minimum
Bankruptcy lasts for 3 years from the day your application is accepted. However, this period may be extended to 5 or 8 years under certain situations, such as leaving Australia without your Trustee’s permission, or failing to attend a meeting with your creditors or not disclosing an asset to your Trustee.
- There will be a public record
Another consequence of bankruptcy is that your bankruptcy will be permanently recorded on the National Personal Insolvency Index, managed by the Australian Financial Security Authority.
- Your bankruptcy will affect your credit rating
The effect of your credit rating is another consequence of bankruptcy. Your bankruptcy will be recorded on commercial credit reporting databases for up to 7 years.
- You may lose some assets
If you have a house or a car worth more than $7,600, then these may be some of the assets you risk losing when filing for bankruptcy.
- You will encounter travelling restrictions
Your ability to travel overseas will be greatly affected. In order to travel overseas, you will need to be granted permission by your Bankruptcy Trustee and return to Australia by the date stipulated. Failure to do so will mean that you may risk increasing your bankruptcy period. In some cases, you may also be asked to surrender your passport.
- Your employment may be affected
There are employment restrictions placed upon those who have declared bankruptcy. People who are bankrupt cannot be the director of a company, cannot hold certain positions such as Gaming room employees, second hand dealers and pawnbrokers, or be Members of Parliament. This consequence of bankruptcy is something that you should carefully consider before applying.
If you would like more information on the consequences of bankruptcy, then please speak to one of our professional and experienced Bankruptcy consultants from Australian Bankruptcy Services. Contact us on our 24 hours advice hotline on 1800 462 767.