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Debunking Bankruptcy Myths Once And For All

By Administrator 27 March, 2015

At Debt Free Australia, we have many years of experience in assistingindividuals who are facing personal insolvency. We perform financial assessments to determine what options are available and can act as the administrator for any formal debt arrangements that one might choose to enter into. Whilst we always strive to help people to avoid bankruptcy, there are times when it is actually the best option for someone. It is then that we see that most Australians are often mistaken as to what bankruptcy actually involves.Bankruptcy has long been tainted with a negative perception, mostly due to the myriad of myths which surround it. To set things straight once and for all, Debt Free Australia debunk the most common bankruptcy myths.

Myth 1: Everyone Will Know.

The need to declare bankruptcy is becoming more and more common, which means that it is becoming more accepted. Regardless, many people worry that “everyone” is going to know about their bankruptcy. There is actually no reason for anyone to be aware that you are bankrupt, unless you tell them about it or they go out of their way to check the public record, which is not very common due to difficulty and costs. We do recommend,however, that you share the knowledge of your bankruptcy with a family member or friend. It can be an emotionally taxing process, so it helps to have that support.

Myth 2: I’ll Lose Everything I have

This is the most common misconception associated with bankruptcy. The truth is that you will not lose everything you own. Your bankruptcy Trustee is obligated to recover whatever funds they can and put them towards your debts, so if you have a substantial asset that would be worth selling, such as a property with equity in it, then yes, you would stand to lose that. But you are allowed to keep a vehicle up to a certain amount, your household items and personal effects should not be touched, and your superannuation is safe. A one-on-one meeting with a bankruptcy advisor at Debt Free Australia will help you to determine how much your individual bankruptcy case is likely to affect your assets.

Myth 3: My Credit Will Be Terrible Forever

Whilst bankruptcy will stay on your credit file for a period of 7 years, this does not mean that your borrowing ability will be tainted forever. If you rebuild your credit file and use your credit wisely after bankruptcy, you could even purchase a home within a few years.

At Debt Free Australia, we love bringing happiness and financial stability back into the lives of over-indebtedAustralians. Personal insolvency is surprisingly common and you are not alone in having to deal with it.For free and impartial advice on bankruptcy and how it might affect you, contact one of DFA’s bankruptcy advisors today on 1800 676 598.