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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.