Is Bankruptcy the Last Option?

[Danysulivan]

Hello guys,
This is one of the question most of us have and many of us believe this is the last option. Is this right? Seriously I don’t think so. Recently I got a chance to meet an experienced Trustee in Bankruptcy) and we talked about this issue. His opinion was not to take bankruptcy lightly and that one should only declare bankruptcy once they have exhausted all other options. Before all that it is important to understand the whole process.

But, I saw many people take their first option as bankruptcy to secure from their debt. Is this a right decision?

 

[Rod]

Listen to the voice of experience. Bankruptcy might solve an immediate issue but can leave you with long term problems such as even getting a credit card. The trustee has good advice.

 

[John R]

Hi @Danysulivan
I agree with @Rod and the Bankruptcy Trustee, personal bankruptcy should only be considered when debts are unable to be re-negotiated (e.g. claiming hardship to extend repayment terms, re-financing the debt on more manageable terms, consolidation of multiple debts with one creditor, etc.) or repaid in a timely manner. Have a read through the "Bankruptcy – What Does It Mean For You?" LawAnswers Blog post.

The ASIC MoneySmart website's Financial Counselling page also includes further information on re-negotiating debt and contact information for free financial counselling services.

Hope this helps!

 

[Tim W]

I concur.
It is best kept as the action of absolute last resort.