Bankruptcy – the First Step towards Financial Freedom
An out-of-control credit card and a downturn in the building industry had Peter (he did not want his surname published), a self-employed bricklayer, drowning in debt.
The tradie said his troubles started when he incurred a large ATO debt and tried to pay it off using his credit card. At the same time he started falling behind in his repayments on a personal loan.
He said not knowing how much he was going to earn from week to week made it virtually impossible for him to set up any type of repayment plan.
“I could not see any way of working my way out of the situation,” he said.
With Australians under more financial stress than ever before, Peter’s story is becoming more and more common.
ME’s latest Household Financial Comfort Report shows that with subdued and stagnant incomes, more Australians are feeling strapped for cash, and being forced to dip into their savings just to cover day to day living expenses.
The report also revealed that while the number of families forced to use their savings to survive was on the rise, 25 per cent of Australian families have less than $1000 in cash savings.
The same report found that 19 per cent of Australians had sought financial help from friends and family in the past year, and 15 per cent had sold or pawned something to pay for necessities.
It also revealed that 42 per cent of households still had the same income as a year ago, while 24 per cent had their incomes cut and just 34 per cent have increased incomes from a year ago.
Bankrupt Advisory Centre CEO, Andrew Bell, said they received calls every day from people who could not see any way out of their situation.
“The first thing I do is let them know that it is great they have been trying to do the right thing and pay everyone back,” Mr Bell said.
“By the time they come to us they are already in a situation where they can’t pay their bills or feed themselves or their families. The only way to turn things around is to start looking after themselves and their own family.”
Mr Bell said very few people fully understood what it meant to declare bankruptcy. The most frequently asked questions were:
- Will everyone know?
- Will I lose my house?
- Will I lose my car?
- Will I be able to travel after declaring Bankruptcy?
He said there was no requirement to publicise the fact you have been forced to declare bankruptcy.
“The whole process is stressful enough without having to deal with the added stress of making it public,” he said.
“In, respect to the other questions, the answers vary from case to case, but as general advice, as long as you meet the requirements of your Bankruptcy Trustee, you will not necessarily lose your house or car or your ability to travel.
“Equally importantly for those who have been dealing with the stress and pressure of trying to cope with growing debt, within 3 to 10 days of declaring Bankruptcy the weight of debt is lifted off your shoulders and you can begin to focus on moving forward in your life.”
In the case of bricklayer Peter, his greatest concern was the horror stories he had heard from other people about Bankruptcy.
Peter said he got to the point where he did not know where to turn and only made an appointment with the Bankruptcy Advisory Centre out of desperation.
He said the staff were very sympathetic and immediately set about outlining the best way to deal with his situation.
With a better understanding of what it meant to declare Bankruptcy Peter, with the assistance of Bankruptcy Advisory Centre, the documents to enter into Bankruptcy were lodged and while he still has a long way to go to achieve financial independence, he said: “life has never been better”.
Mr Bell said Peter’s experience was typical of many of their clients. By the time people contact Bankruptcy Advisory Centre they are desperate and highly stressed. In a very short time we can eliminate the financial burden that has become all-consuming and put them on a path toward getting their life back on track.