Do The Pros Outweigh The Cons Of Being Bankrupt?
Bankruptcy is a legal proceeding that aims to give people a fresh start who cannot repay all their debts by liquidating their assets.
Many times bankruptcy can feel like a complicated maze with no exit. It can even be termed as a “black cloud”, as many clients often fear the word itself.
While declaring bankruptcy might seem like an easy way out, it should never be considered the first point of action when faced with financial troubles. Your main priority should always be to see if you can pay off your debts before you go bankrupt.
However, if you have already considered every other avenue with no escape insight, you can consider declaring your bankruptcy.
Therefore, if you or a loved one finds themselves in a similar situation, it is always worth weighing the pros and cons to see if this is a viable option for you.
So, let’s get started!
What Is Bankruptcy?
In simple terms, bankruptcy is a legal proceeding that aims to give people a fresh start who cannot repay all their debts by liquidating their assets and curating insolvency practice rules. With these two in place, they can pay back all their debts. Other than personal services, the laws of bankruptcy also help to protect businesses that struggle financially.
What Are The Pros And Cons Of Declaring Bankruptcy?
When you have tried every method to get out of bankruptcy, but to no avail, you can apply for bankruptcy. This way, you can get the help you need to deal with debts and other payments.
However, before you decide to file for bankruptcy, it is always a wise idea to weigh the pros and cons to see if it is a good idea for you.
What Are The Pros?
- Bankruptcy will help you cancel almost all of your debts for good. These include credit card debts, personal loans, payday loans, and so on.
- Debt collectors and creditors will stop bothering you.
- There is no pre-set minimum amount or any lodgment fees needed to file for bankruptcy. A certified insolvency agency will help get the paperwork done, free of cost.
- You can save a lot of expenses while declaring bankruptcy, as all your savings will be protected.
- With a reliable insolvency professional, there is a good chance of you keeping your house.
- All your vital assets, including personal belongings, furniture, vehicles, etc., are protected.
- All tools used to earn a monthly income are protected.
- The withdrawn superannuation and the one that your employer pays are protected.
- You can continue to run a business with your name.
- You will still be able to travel overseas while being bankrupt with written permission from your Trustee.
- Your bankruptcy situation will never be advertised or publicized.
What Are The Cons?
- The process of bankruptcy in Australia is tiring as it can last almost three years.
- You will not be able to buy any assets or properties while being bankrupt.
- Being bankrupt might affect the licenses you currently hold to earn your monthly income.
- Once you declare bankruptcy, your identity will always remain on the NPII (also known as National Personal Insolvency Index).
- You can't be self-managed or the trustee of the Superannuation Fund.
- It is not possible to be the full owner/director of a business.
- Bankruptcy might not get rid of all debts. This includes the fines as ordered by the Court, fraud debts, HECS debts, child support payments, and so on.
- Your Trustee will require unexpected payments should you happen to win a lottery or gamble.
While bankruptcy might sound like the end of the world, we assure you it is not. In some cases, it might even do well for you. However, make sure to always keep bankruptcy as a last resort to solve your problems.
If you find yourself weighed down by your debts, reach out to Insolvency Australia to discuss if bankruptcy is the best solution for all your financial troubles!