Common Bankruptcy Myths

Bankruptcy is a significant financial decision that should not be undertaken lightly. Unfortunately, there are many myths and misconceptions surrounding bankruptcies in Australia, which can lead to wrong decisions and a lack of understanding of the process. It is important to understand the truth behind bankruptcy before making any final decisions.

Myth 1: Bankruptcy Stops You From Working

This is false. Bankruptcy does not prevent you from working or prevent you from earning an income. Bankruptcy does, however, affect certain types of employment. For example, you may be prevented from applying for certain positions, such as those involving financial management.

Myth 2: Bankruptcy Will Ruin Your Credit Rating

The truth is that bankruptcy does not necessarily ruin your credit rating. Bankruptcy companies in Australia will usually report to the credit bureaus, which will provide information about your bankruptcy. However, the effects of bankruptcy on your credit rating will depend on your individual circumstances, such as the amount of debt you have and your repayment history.

Myth 3: Bankruptcy Will Last Forever

This is false. Bankruptcies in Australia are discharged after three years, although the period of bankruptcy may be extended in certain circumstances. This means that after the three-year period, the bankruptcy will no longer appear on your credit report.

Myth 4: Bankruptcy Will Stop Creditors From Contacting You

Bankruptcy does not stop creditors from contacting you. Bankruptcy companies in Australia will notify creditors of your bankruptcy, but they may still contact you to attempt to collect the debt. You should be aware that creditors may also take legal action during this period, so it is important to consult a qualified professional before making any decisions.

Myth 5: Bankruptcy Means You Lose All Your Assets

This is not true. In most cases, you will be able to keep your assets, such as your home, car and other personal possessions, depending on the laws of your state or territory. However, it is important to understand the laws of your state or territory when it comes to bankruptcy, as this may affect your ability to keep certain assets.

Myth 6: Bankruptcy Is A Sign Of Failure

Bankruptcy does not have to be a sign of failure. Bankruptcy can be a positive step towards financial freedom and can help you to manage your debt and get back on track with your finances.

By understanding the truth behind common bankruptcy myths in Australia, you can make an informed decision about whether bankruptcy is the right option for you. It is important to seek advice from a qualified financial professional before making any final decisions.