Bankruptcy: it’s not always the easy way out

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Bankruptcy: it’s not always the easy way out

Bankruptcy is the legal process which releases a person from most of their debts.  This may initially seem like an attractive option if you are having financial difficulties.

However, before making a decision to go bankrupt, consider the long term consequences:

  • Your bankruptcy will be recorded on a credit report for five years. It will also be on the National Personal Insolvency Register for life
  • You may lose some of your assets including your house and your car
  • You can earn an income but anything earned over a certain threshold, you will need to pay to your trustee in bankruptcy who will pass it on to your creditors
  • You may need to keep paying Child Support, Centrelink and Higher Education debts

Before making a decision about going bankrupt, make sure you get independent advice from a financial counsellor.  They will be able to assist you to find alternatives to bankruptcy depending on your individual financial circumstances.  Bankruptcy is rarely the best solution.

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