Here we will discuss, what happens when you declare bankruptcy. Upon obtaining the protection of bankruptcy you will not notice anything different. You will get up and go to work the same as you have always done. Life goes on.

1. What happens once you become
bankrupt?

2.  You can become bankrupt within 10-14 days, and the first step is getting
a bankruptcy trustee. Perhaps you will choose me.
 As a result, almost all your debts (debts and liabilities – or ‘provable
debts’, in bankruptcy terms) become owed by your bankrupt estate, not
by you. You are now debt free, or almost debt free.

3.  There are exceptions: anything you owe to Centrelink, Child Support and
HECS. Court-imposed fines and debt as a result of fraud are also not
covered.

4.  If you want to keep an asset that is allowed under the law, such as a car
and maybe your house, you must continue to pay for it.
 This is called ‘secured debt’ and I will cover them later. For now, we’re
most concerned with the most common type of debt – unsecured debt.

5.  This is the dead-end sort of debt that burdens most people and what I
come across most of the time: credit card debt, tax debt, store card debt,
phone debt, personal loan debt, and the like. Does that sound familiar?

6.  When you go bankrupt this sort of debt is simply cancelled immediately
as far as you are concerned.
 You personally don’t owe it any more – full stop! Instead, your bankrupt
estate owes it, and your trustee will manage it.

7.  One thing is very important to note: if you have been paying any of this
type of debt by direct debit, go to the bank and cancel the
arrangements.

8.  This is extremely important as with both the alternatives to bankruptcy –
Debt Agreements and Personal Insolvency Agreements – you are not
released from your debts until the final repayment is made.
 That could be five years, or longer.

9.  Once the bankruptcy is in place, your bankruptcy number and date of
bankruptcy are recorded on the government’s database – the National
Personal Insolvency Index (NPII).
 You are there forever. It is a public document and can be accessed if a fee
is paid, but this rarely happens.

10.  What it does mean is a black mark against your name with the
commercial credit rating agencies.
 It’s there for five years. That’s the credit rating to worry about. You may
already be listed as having bad credit risk.

11.  Once you are bankrupt, your trustee will contact your bank and all your
creditors to let them know, and ask them to contact him/her regarding
the chances of your debt being repaid.
 Your bankruptcy is not advertised in a newspaper.

12.  Once you have gone bankrupt, your creditors are not allowed to contact
you about your debt – and they cannot reappear in three years’ time.
 Your trustee will secure any assets that will be part of your bankrupt
estate and begin managing it while you put the stress of unpaid debt
behind you, and get on with life.

13.  There are other options apart from bankruptcy and you can read about
them on this website, but in most cases I believe bankruptcy offers the
most effective solution.
 It provides immediate release from the debt and recognises you as a
human being.

14.  It also allows you the chance to earn a minimum level of cash-in-hand
income (always more than $1000 a week) and to keep certain property
so you can live properly.

15.  Once you have the protection of bankruptcy, you will find your focus will
change from constant worry about the debt, to regrouping, living your
life and recovering from the financial distress.
 Life will be happy and productive again, and you will regain your self-
esteem.