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Is bankruptcy a way out?

In Australia, becoming bankrupt is not a decision that should be taken lightly. You should really try to avoid bankruptcy. Your credit history will be damaged and you’ll likely lose most of your assets – most worryingly of course, your home.

It can definitely seem like an attractive option – if only as a way of silencing the creditors and debt collectors … but it’s certainly not an easy option. Once you’ve decided on bankruptcy, there really is no going back.

For some people, bankruptcy may be a viable option. However, always get some independent advice before considering bankruptcy, You can speak to your bank, accountant, lawyer, professional financial adviser or independent financial counsellor. Click here for some relevant contact numbers.

There may be other options that will be better than bankruptcy for you, including:

  • Talking to your creditors about arrangements to repay your debts.
  • Putting in place a budget and reducing your expenses so you’ve got extra money to repay your debts.
  • Selling some of your non-essential assets and using the money to repay your debts.
  • Finding out if you’re entitled to government assistance.
  • Getting early access to your superannuation if you’re financial situation is likely to improve in the short-term. There are strict rules that need to be satisfied based on compassionate grounds or due to severe financial hardship, so you should speak with your superannuation fund.
  • Entering into a formal debt agreement. There are legal implications and fees are applicable, so you should obtain professional advice, for example from a financial counsellor about debt agreements.