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Declaring Bankruptcy

Declaring Bankruptcy in Australia

The number of people declaring Bankruptcy each year is on the decline in Australia. In the 2016-17 Financial Year:

  • 16,320 people declared bankruptcy (down 5.1% from the previous year)
  • Personal bankruptcies in South Australia fell to the lowest level on record for the fourth consecutive financial year
  • New South Wales, Victoria and Queensland all recorded a significant decrease in Bankruptcy

The fall in Bankruptcy cases in Australia seems to be related to the rise in Part 9 Debt Agreements across all states and territories. However, declaring Bankruptcy still has its place in Australia.

When declaring Bankruptcy is the best or only option

Despite its reputation, Bankruptcy is not a punishment. Bankruptcy is a way to alleviate severe financial hardship whilst keeping your creditors happy. It involves a number of regulations which may place restrictions on your life.

There are regulations for your assets, income and even overseas travel. However, you may find your situation falls short of these regulations, so your life may not be impacted at all. For instance:

  • If you don’t own property, bankruptcy won’t impact your living situation.
  • Bankruptcy will not impact your income if you don’t earn more than a set amount
  • You may keep a vehicle through bankruptcy as long as its value is not worth more than a set amount
  • Bankruptcy won’t impact your employment unless you need a professional license for work, such as a Real Estate Agent

The regulations of Bankruptcy may not impact your life. If you are struggling to make contributions towards your debt and maintain your everyday living expenses, declaring Bankruptcy may be the best option for you.

Want to avoid declaring bankruptcy?

The obligations and restrictions which come hand in hand with declaring Bankruptcy can have a very serious impact on your lifestyle. You must consider all of your options before you decide to play the Bankruptcy card.

Debt Agreements were introduced nearly two decades ago and were created as an alternative to bankruptcy. In the 2016-2017 financial year, more than 13,000 Australians used a Debt Agreement as a solution to their debts. A Debt Agreement is a contract between you and your creditors outlining a new repayment arrangement you can afford.

Often, you will only need to repay a small percentage of your original debt while all future interest and fees are frozen. Entering a Debt Agreement is still an act of Bankruptcy, however, it doesn’t come with the long list of restrictions and obligations associated with bankruptcy.

Are you considering declaring Bankruptcy in Australia?

Declaring Bankruptcy in Australia is a simple enough process. Debt Rescue is here to help, by advising your creditors that you don’t have enough income or value in assets to cover the debts you owe.

In Australia, the term of your Bankruptcy will generally last for three years. For those three years, you will face restrictions on your income, assets, ability to borrow money, employment and overseas. Once your Bankruptcy has ended, it will be noted on your credit file for at least a further 2 years, noting you as a discharged bankrupt. As a discharged bankrupt, you will be able to do everything a person with a good credit file would be. However, you may find it difficult going through mainstream financial lenders. For example, if you apply for a loan, a traditional bank might take your bankruptcy into account and refuse your application.

It is still possible to borrow money through non-conforming lenders who base their approval on a different set of criteria. Companies like Positive Solutions Finance can find competitive loans for people with bad credit ratings, have entered into a debt agreement and discharged bankrupts. For details about the obligations and restrictions involved with declaring bankruptcy, check out our blog post – Restrictions during Bankruptcy.

Help with declaring Bankruptcy in Australia

To be 100% sure that declaring Bankruptcy is the right option for you, call Debt Rescue on 1800 00 3328 and discuss your situation with one of our experienced Case Managers. We will speak to you about your financial situation and recommend the best course of action for you.

Debt Rescue can guide you through the Bankruptcy process and ensure it is completed correctly. We will answer any questions you have along the way and ensure the entire experience is quick and free from stress. Alternatively, we may be able to recommend a different debt relief solution for you. If you are considering declaring bankruptcy in Australia, talk to a Debt Rescue Case Manager today.

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