Bankruptcy Myths and Misconceptions in Australia
Bankruptcy is a legal process that relieves individuals and businesses in Australia from overwhelming debt. However, various Bankruptcy Myths and Misconceptions lead to confusion and misinformation. In this article, we aim to debunk some of the most common bankruptcy Myths and Misconceptions specific to Australia and shed light on the realities of the bankruptcy process.
Myth: Bankruptcy Is Only for the Financially Irresponsible
One prevalent misconception is that Bankruptcy is only for those who have been financially irresponsible or reckless with their money. In reality, Bankruptcy can affect anyone facing unforeseen circumstances, such as job loss, medical emergencies, or business failure. It is a legal option governed by the Bankruptcy Act 1966, designed to help individuals and businesses recover from overwhelming debt and start anew.
Myth: Bankruptcy Will Ruin Your Credit Forever
While Bankruptcy does impact your Credit Score and Creditworthiness, it is not a permanent stain on one’s credit history. In Australia, bankruptcy listings remain on credit reports for five years from the date of discharge for bankruptcies lasting less than five years or two years from the date of discharge for bankruptcies lasting more than five years. After the Bankruptcy is discharged, individuals can work on rebuilding their credit scores over time.
Myth: All Debts Will Be Discharged in Bankruptcy
Not all debts are automatically discharged in Bankruptcy. In Australia, certain debts, such as child support (article link), court-imposed fines, and debt obligations incurred fraudulently, cannot be eliminated through Bankruptcy. Some secured debts, such as your car or home, may require surrendering the associated assets unless arrangements are made to continue the repayments. At Bankruptcy Advisory Centre, we can help you navigate these regulations so you may not lose your house or car during Bankruptcy.
Myth: You Will Lose Everything in Bankruptcy
Another common misconception is that individuals will lose all their assets in Bankruptcy. In Australia, bankruptcy laws include provisions for protecting certain assets, known as “exemptions.” These exemptions vary by state and typically include essential items like household goods, a vehicle up to a specific value, and tools of your trade necessary for work.
Myth: Bankruptcy Is a Quick Fix for Debt Problems
Bankruptcy is not a quick and easy solution to debt problems. It is a legal process that involves the Australian Financial Security Authority (AFSA) and takes time to complete. Individuals must comply with the bankruptcy rules and cooperate with the bankruptcy trustee throughout the process. Certain restrictions are placed on bankrupt individuals and company directors; for example, you may need to seek permission from your trustee to travel overseas while bankrupt.
Myth: You Can Hide Assets to Protect Them in Bankruptcy
Concealing assets during Bankruptcy is illegal in Australia and can lead to severe consequences, including extending the bankruptcy period or potential criminal charges. When working with your bankruptcy trustee, you must fully disclose all assets and liabilities. At the Bankruptcy Advisory Centre, we can help you navigate this requirement and ensure you understand your obligations during Bankruptcy.
Myth: You Can’t Have a Bank Account or Credit Card After Bankruptcy
While Bankruptcy may affect the ability to obtain credit during the bankruptcy period, it does not permanently prohibit individuals from having a bank account or credit card. After the bankruptcy period ends, individuals can apply for new bank accounts and credit cards. However, they may have to demonstrate improved financial responsibility and be subject to higher interest rates or regulations because of their low Credit Score and Creditworthiness.
Myth: Bankruptcy Is the Only Solution for Debt Relief
Bankruptcy is one option for debt relief in Australia, but is not the only solution. Depending on individual circumstances, alternatives such as debt consolidation or debt restructuring, informal arrangements with creditors, often referred to as a part 9 debt agreement or personal insolvency agreements, may be viable options.
Myth: Bankruptcy Is Free of Costs
There are costs associated with filing for Bankruptcy in Australia, including AFSA’s lodgement fees and, if applicable, trustee administration fees. These costs may vary, and individuals should know the expenses involved. At Bankruptcy Advisory Centre, our prices start from $850. We will help you navigate the process, explain all your options, deal with debt collectors and lodge all the required paperwork to AFSA on your behalf.
Myth: You Can’t Travel Overseas During Bankruptcy
While Bankruptcy places certain restrictions on overseas travel, it is not an absolute prohibition. Bankrupt individuals need to seek permission from their bankruptcy trustee before travelling overseas. The trustee will consider factors like travel’s purpose and whether it will likely interfere with the bankruptcy process.
Need more information about Bankruptcy Myths and Misconceptions?
“Understanding the reality of Bankruptcy is crucial for individuals considering this option as a means of debt relief. Don’t be fooled or put off by the Bankruptcy Myths and Misconceptions surrounding Bankruptcy. Get the right advice so you can make informed decisions.
At Bankruptcy Advisory Centre, we have over 30 years of experience assisting everyday Australians to understand all their options, make informed decisions, and navigate their way out from overwhelming debt to financial freedom.”
Andrew Bell Bankruptcy Advisor
If you seek advice on Bankruptcy Law Changes and procedural guidance in Perth, Brisbane, Melbourne, Sydney or anywhere around Australia. We can help you make informed choices before selecting your best options. Get a complimentary first consultation by calling 1300 887 210. We can help you with questions about bankruptcy laws in Australia.
Our fees start from $850, offering you exceptional value for our professional services. Contact us now to speak with one of our experienced bankruptcy specialists, and let us help you get back on track with a fresh start.
Andrew Bell Bankruptcy Advisor
With over 30 years of experience in debt solutions and bankruptcy in Australia Andrew can find a solution for you.
“Nothing is more satisfying to me than knowing that I’ve helped someone get back on their feet by guiding them through the Bankruptcy Process. Rest assured, you’re in good hands with me as we solve your financial problems together.”