Is Bankruptcy really the answer?

05 Mar Is Bankruptcy really the answer?

Is Bankruptcy really the answer

Bankruptcy can occur when you don’t have enough income to pay the debts you owe. People generally file for bankruptcy when they have accumulated too much debt which has become unmanageable, and after speaking to a financial advisor and exploring the other options of debt management.

The most common reasons for bankruptcy are unemployment, divorce or relationship breakdown, illness, redundancy, accumulating small pay day lenders and things can easily get out of control, trauma or illness, redundancy or unemployment, or simply living beyond your means.

When bankruptcy is declared, a Trustee will be appointed to administer your estate. The trustee investigates your financial affairs, notifies your creditors and has rights to take possession of assets and sell them, distributing the sale proceeds dividends to your creditors.

Bankruptcy Pro’s and Con’s

Before filing for bankruptcy, it is important to consider the following:

Pro’s

  • Most of our debts will be cleared and you will get a fresh start
  • Legal recovery action for debt collection will be stopped
  • Harassment by creditors will stop
  • There is no threshold to lodge go bankrupt
  • You will usually keep your furniture, appliances, tools of trade and life insurance.
    Note: For full details of bankruptcy, go to www.afsa.gov.au

Con’s

  • Your credit rating will be affected for 5 years which will negatively impact your credit score
  • Your name will be recorded on the National Personal Insolvency Index forever
  • Assets of value such as your house, car, jewellery etc will be sold
  • Debts such as HECS, child support, Centrelink and court fines will not be included
  • You may be required to surrender your passport and will need to seek permission from your trustee to travel overseas if it is a legitimate reason, e.g. work purposes or family
  • You will have to resign as a company director and may not get involved in the management of a company without certain permissions

There are other options

The good news is that bankruptcy isn’t the only debt solution available. If you want to find a solution that lets you keep your assets, then perhaps a Debt Agreement is a better option. If you find yourself in a real struggle with debt collectors chasing you and it seems like you might have to go bankrupt, there are alternatives even if your situation is serious.

How we can help

Talk to us about the Financial Hardship obligations of your creditors, Moratoriums and restructured payment amounts and at Active Debt Specialists, we are experts at implementing the Debt Agreement* repayment option, which has no interest, stops debt collectors and your repayment is only what you can afford.  It’s an Act of Bankruptcy but you can keep your home and other assets if half of your creditors accept your repayment offer, which is calculated on what you can afford.

Find the right solution to help solve your credit card debt issues.

Give us a call today on 1800 085 550 for a free no- obligation confidential chat.

* Debt Agreements will affect your credit rating and conditions apply. Find out first.

 

 

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Active Debt Specialists is based in WA, successfully providing debt solutions to individuals and businesses since 1998. We help thousands of Western Australians to resolve their debt, keep their family homes, continue operating small businesses and eliminate financial stress.

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  1. Credit cards, store cards and personal loans are types of unsecured debts. Mortgages and car loans are not.