# Life after Bankruptcy: the good, the bad and the ugly

Bankruptcy is not the fairy-tale way of eliminating your debt. Serious consequences are involved when declaring bankruptcy and you should always be well informed before making the decision to become bankrupt. While some individuals have no other option than to declare bankruptcy, it should only ever be used as a last resort. Understanding your rights, responsibilities and the penalties that come with bankruptcy is the smartest way to decide whether or not bankruptcy is the right option for you. Should you come to the conclusion that bankruptcy is your only option to deal with your financial problems, you should know what awaits you on the other side.

### The Good

As with many life changing decisions, you will experience both advantages and disadvantages when declaring bankruptcy. After months of heated phone calls with creditors and the stress of not having adequate funds to make repayments, a trustee will be appointed to deal with creditors and organise the repayments of outstanding debts. Although not having to deal with creditors may initially seem like a weight being lifted from your shoulders, you must also realise that your trustee has the ability to sell your assets to repay your creditors.

When you are declared bankrupt by the Insolvency & Trustee Service of Australia (ITSA), you will be appointed a trustee who will be responsible for controlling your assets and repaying your debts. Your trustee has the right and the obligation to sell valuable assets in order to repay outstanding debts. While some assets are protected, in most cases your trustee will be able to seize your home, any land you may own, motor vehicles, lottery winnings and any shares or investments. Any assets that are jointly owned with another personal may also be authorised for sale.

### The Ugly

Filing for bankruptcy will leave you with a virtually irreparable, bad credit rating. No moneylenders will want to do business with you, as you’ve become a high risk customer since becoming bankrupt. If you have developed a bad credit rating from failure to make repayments on time or exceeding your credit limit, you can generally turn your credit rating around within a matter of months or just a few short years. Bankruptcy, on the other hand, will continue to cause havoc with your finances for many years after initially being declared bankrupt.

Not only will your financial status be ruined upon filing for bankruptcy, but you may also find that your current employment is no longer available to you. Bankruptcy can prevent you from undertaking certain professions or holding certain licences, sometimes making it difficult to find work in your area of expertise.

Declaring bankruptcy is something that should be carefully considered before any action is taken. If you are left with no choice, other than to file for bankruptcy, it is important to understand the life changes that you will face. While there are some good points to declaring bankruptcy, you will soon find that these are very limited and, in most cases, the bad always outweighs the good.

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