Avoiding bankruptcy

Bankruptcy is a legal process that releases a person from almost all of their debts. However, it has many serious consequences that will affect your future, so it’s best to fully understand the implications. Remember, declaring bankruptcy may not clear all your debts.

    Who can help you decide if bankruptcy is right for you?


    A financial counsellor can work with you to help you understand how bankruptcy will affect you and identify if there any alternative options available. If you decide that bankruptcy is your best option, our financial counsellor can assist you with the process, free of charge. They will also be able to guide you through the paperwork to make the process a little easier.


    For detailed information on bankruptcy, visit the Australian Financial Security Authority.


    What are the consequences of declaring bankruptcy?


    Bankruptcy has a number of short and long-term consequences that vary from person to person. We have listed a few examples of what you can expect below.

    1. You’ll be listed on the National Personal Insolvency Index for life.
    2. Your name will be placed on a credit file, which may affect your ability to borrow money in the future.
    3. You may be prevented from taking up certain jobs in the future.
    4. You may not be able to rent certain properties.
    5. You may lose some of your assets, including your home and/or your car.
    6. You may be prevented from travelling overseas.
    7. Contributions may be taken from your wages if your income is above the index amount. The index amount changes from time to time so you should visit the Australia Financial Security Authority website to find out.





    Financial difficulty is something that can affect anyone. Fortunately, there are a number of options to help you get back on track. The options include:

    • Bankruptcy
    • Debt agreement
    • Personal insolvency agreement

    Preventative measures


    Due to the varied and serious consequences of declaring bankruptcy, it should only be considered as a last resort.
    Consider the following steps to help you overcome your financial predicament.

    Talk to a financial counsellor
    A financial counsellor can help you to work out a sustainable and affordable budget to cover your debts. Discuss all your options with the financial counsellor.
    Check for insurance
    Double-check that you have no insurance that can cover your debt.
    Talk to your creditor
    Talk to your creditor and negotiate a payment plan. It may be possible to repay the debt over a period of time rather than choosing bankruptcy.
    Offer to settle the debt
    If you can, offer to settle the debt with a full and final payment. In some circumstances, a reduced lump sum may be accepted.
    Consolidate all your debts
    Combine all your debts into one manageable monthly payment.

    Additional information

    women meeting with finance councillor
    Looking for guidance?
    Contact us today to organise a meeting with one of our financial counsellors.

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