There’s no denying it – being in debt is stressful. By the time most people apply for bankruptcy, they have been dealing with creditors for years. Their phone is constantly ringing with the calls from debt collectors, and there is a pile of overdue notices on their desk.
Many people delay applying for bankruptcy because it is seen as such a bad thing. You end up surrendering your assets and your credit is ruined for years. The process can also be drawn out and difficult. But there is more to bankruptcy than meets the eye.
Consequences of Bankruptcy
Bankruptcy has an unfortunate stigma attached to it. Many people believe it implies that they are unable to manage their money properly. There is also the worry that your bankruptcy will follow you for the rest for your life. Beyond a credit rating drop, there’s fear of it following you into every banker’s office and every relationship.
During bankruptcy you will normally have to sell off assets to clear your debts. This can leave you with reduced wealth. Bankruptcy can lead to difficulties in other areas of your life. For example, if you have paid creditors within the last six months, liquidators can take the money back.
Positives of Bankruptcy
While applying for bankruptcy is stressful it does offer a positive: closure. Compared to struggling with debt for years, bankruptcy provides a new start. After bankruptcy there are some negative effects, but those fade over time, and getting the right advice can bring you back out.
Gervase Consulting’s Senior Manager, Clare Birnie, says “Often, there are people who believe they can’t work, run a business, obtain credit or travel overseas. However, if you have the right people around you, you can work out what you can or cannot do legally.” There are plenty of things that you can still do while bankrupt. For example, there is no limit to the amount of income you can earn, and you still can travel overseas with permission. If you want to you can still run a business under an ABN if conditions are met.
If you get advice now you can limit the negative impacts of bankruptcy on your life.The Insolve panel is made up of members who have seen it all and can show you the best path forward.