For most people, bankruptcy is a terrifying concept. But how much do we really know about it? And what does it mean for us financially? Today, personal bankruptcy in Australia is considered to be a ‘safety net’ where you can start again (albeit with penalties) and build a new future for yourself and your family.

This sounds great in theory but in fact it’s a serious decision and one that should never be made lightly. If you or a loved one are considering filing for personal bankruptcy here are some important things you should know first:

What are the limitations and downfalls?

*  Your finances will be under scrutiny by a trustee for a period of 3 years

*  You will be limited with respect to borrowing money during this time

*  You’ll find it difficult to borrow money for a period of time afterwards

*  You can’t travel overseas without gaining prior permission from your trustee whilst bankrupt

*  You can’t be a company director, manage a corporation or hold a number of public offices

*  You can run a business in your own name (sole trader) and you must have your full name along with your business name on all business stationery

*  You cannot own a car worth more than $8,000.00 as an individual (or $16,000.00 for a single car as a jointly owned vehicle). This refers to the equity value, less any finance owing. You’ll be listed on the National Personal Insolvency Index (NPII) for life.

What are the benefits?

*  Debts to your name (excluding fines, HECS and Child Support) will be cleared within 24-48 hours of lodging your completed debtor’s petition

*  Creditors will stop calling and all actions against you will cease

*  You can earn as much money as you wish while bankrupt (but will have to make contributions to your bankrupt estate above certain income limits)

*  You can walk away from all the stress and worry that you had before regarding your finances

Should I declare bankruptcy?

Declaring bankruptcy is a life-changing decision and one that can’t be undone once started. If this is something you’re considering or if you’d like to know if it’s an option for you – speak to a financial expert and they will be able to talk you through your options. If you’re feeling stuck, you will do well to seek advice from experts in the financial field. Having someone with experience in dealing with debt and bankruptcy by your side can help guide you through the process without making unforced errors or jeopardising your financial freedom more than you have to. A bankruptcy expert will work with you to find the best possible outcome.

Who can I turn to?

A debt, credit or bankruptcy specialist can be sourced online or by phone with ease. Start with a simple Google search or ask for a recommendation. Vendors such as Credit Counsellors Australia are accomplished operators in the financial services industiry and are here to help you to establish your position, work out what creditors need and then create a plan for how we’ll deal with your debts.

You don’t have to work in a bank to be good with money and now with debt advice readily available online, you don’t need to pay the earth to get good, honest information to help you improve your own circumstances.