Various Consequences of Filing for Bankruptcy
Although filing for bankruptcy can help you overcome insurmountable debt, making a decision to go down this path should not be taken lightly. Filing for bankruptcy, whether voluntary or court ordered by creditors, is a serious process and has a host of ramifications that you would have to face down the line. This is why it is prudent to enlist the services of a bankruptcy solicitor who can advise you on whether this is the best course of action for you to take in relation to your financial situation. Here are some of the various consequences that you may face after filing for bankruptcy.
You may have to sell all your assets
When you file for bankruptcy, you may have the pregorative to retain your household goods and equipment that is prudent for you to earn an income. However, it should be noted that this is only acceptable to a certain indexed amount that would be calculated for you by your bankruptcy solicitor. Nevertheless, valuable assets such as property will be sold off in an attempt to recoup the money that is being sought after by your creditors. In addition to this, it would be illegal of your to conceal any assets that may help in financing the bankruptcy. You also will be prohibited to try to dispose of assets outside of Australia. In the event that you are suspected of this, you will be subject to being criminally prosecuted.
Your future employment and business opportunities may be affected
Filing for bankruptcy does not mean all your financial trouble will end there. For one, if your current income surpasses a specified amount, the court may require you to keep making partial contributions until your debt is paid. Other than this, there are also some restrictions that you may have to face post-bankruptcy. For instance, once you have filed for bankruptcy you will not be able to take on the position of director in any company. In addition to this, you will not have the permission to manage a company unless it has been expressly granted by a court of law. Lastly, filing for bankruptcy could also stifle any chances you may have at holding public positions.
You may not be exempted from all your debts
One misconception some people make about filing for bankruptcy is that they will automatically be freed from all their debt. This is not true though. Typically, filing for bankruptcy will terminate your liability for some types of secured debts such as personal loans and credit card debt. However, if you also have fines, child support or penalties, you will still be accountable for them. Your bankruptcy lawyer would advise you on which debts you will be released from and those that you will still be liable for.