There can be serious consequences of bankruptcy and it also comes with certain restrictions that could be imposed on you. However, understanding your own individual circumstances and opting for debt relief in Australia from financial burden is sometimes essential and a right decision for your safe financial future.
Let’s first understand who can file for bankruptcy. One is eligible for declaring bankruptcy in Australia if:
People associate the term bankruptcy with fears such as isolation, being a loser, etc. Let’s clear the mistaken image of term, which is developed to give a sense of relief and a good life after bankruptcy. Following are some myths regarding common misconceptions about the restrictions during bankruptcy.
I cannot operate a business
You can keep and run your business as a sole trader or self-employed person and make money for yourself. You can’t however, hold the office of directorship in any company for three years of your bankruptcy.
I won’t be able to buy a house ever again
You won’t be able to buy a house ever again if you don’t go bankrupt!
Although your credit rating will be affected for 5 to 7 years but you can use this time effectively to save for a house.
I can’t travel overseas if I am bankrupt
You can travel anywhere while being bankrupt within or outside Australia after declaring bankruptcy in Australia. However, you have to provide information regarding your trip details and the person paying for your trip. You need an approval from the trustee. Moreover, if a lot of travelling is a part of your employment you can get an open travel; permit.
I cannot continue my Job if I have Become Bankrupt
Your employers have access to your credit report but bankruptcy can never be used as a cause of terminating any employee.
I can’t earn over a certain level of income in bankruptcy
There is no restriction on the income level. However, after a certain level is reached you have to pay a specific some to your bankruptcy.
I will never be able to get credit or loan in future
The bankruptcy is recorded on the credit report for seven years and permanently on National Personal Insolvency Index. However, many credit providers are involved in debt assistance of people with past problems like bankruptcy.
Moreover, if you have started moving towards saving, banks will be willing to accept your application for credit.
I will not be able to keep any property
There is certain property of a bankrupt known as non-divisible property that a bankrupt is entitled to hold. Furthermore, tools of trade that are used to earn money can also be retained if under certain monetary value prescribed.
Debt management expert Gail Vaz-Oxlade wrote in her book:
“It won’t be easy to live through. And the black mark will stay with you for a long time. But there is an end and you can have a life — a good life — after bankruptcy.”
