By Charles Bosse
Australian Insolvency Specialist
Only you can answer that question undoubtedly, bankruptcy is a massive step and in no way is it taken lightly it is and I think always will be deemed a last hope. In an attempt to address the question should I file for Bankruptcy I want you to consider 5 mind-sets. Just something to identify that I see everyday that might help you make a more informed choice.
"I should of done this years ago!". I call this the bankrupts lament, in almost every situation when someone is filing for bankruptcy they regret the fact that they hadn't acted sooner. There are a thousand reasons why we procrastinate bankruptcy, whether its the hope things will improve, the stigma surrounding the decision or just apathy whatever the reason once someone has made the decision the feeling of relief is very real. So the moral of the story is its in our nature to hang on to the bitter end with our finances, we created the mess and we are going to get ourselves out of it even if it kills us, and for some it almost does. Are you putting off the inevitable? Are you hoping if you ignore those blocked calls they will just disappear? Weigh up in your mind how long you think it will take you to pay all your debts down and if its more than 3 years then you should seriously consider bankruptcy. Bankruptcy in Australia is for a total of 3 years and you are debt free.
2. "I'm sure things will improve?" It's just the way we are built but we are generally optimistic when we secure a loan or sign up for a credit card or start our own business. If we didn't feel like we could comfortably re-pay the debt we would never of signed up right? I know of people that have spent 10 -15 years hoping thing will improve only to find that they really haven't and now they are further down the rabbit hole. Probably the more rational way of approaching our financial future is to assume things will stay the same or probably worsen. Outside of China and a few other 3 world nations economic growth is not in anyones near future the projections are more of the same minimal growth and steady as she goes. This reflects Australia's interest rates and our economy generally.
3. "I got myself into this mess I will get myself out of it!" They say a sign of maturity is taking responsibility for your own actions. You will observe with young people its always someone else's fault, right thinking adults own their decision right or wrong and will suffer the consequences as they come. If you are faced with overwhelming debt the hardest thing in the world to do is to admit to yourself that you alone can not fix it. We will work ourselves to death trying to pay debts way beyond our capacity to do so, marching backwards for years, avoiding creditors, signing up for yet another credit card in an attempt to handle things the best way we can. Finally one day you can't get any more credit and you have someone show up on your doorstep with a summons to pay a debt in 28 days that you have definitely no way of doing, then at that point some stop and say no more "I'm done!" I would say that 50 % of the bankruptcies I do are the result of some financial situation out of the individuals control. Losing your job, a debilitating illness, market conditions, a customer didn't pay your bill and the list goes on. Sometime more than we realize much of what happens around us is far beyond our control and so it goes with personal or business finances.
4. "I don't want to be seen as a quitter or a failure" This is a huge stumbling block for everyone I think if you didn't feel this way you wouldn't be human. It's one thing for you to know your going bankrupt its completely another for all your friends and family to know. If you are asking yourself who will know you have gone bankrupt the answer is simple; All the people you owe money to will find out of course and then the people you tell and that's it. In Australia the privacy laws are such that no one will know not even your neighbor, its not published in the newspaper its not on TV its a very private matter.
5. "I can't go bankrupt because ...".
- I can't travel overseas? Wrong.
- I will lose my job? Unless you are an accountant or a solicitor and a few other very specific jobs you won't.
- My boss will find out? Wrong.
- The people in my town will know? Wrong.
- I can't run a business anymore? Wrong.
- I can't employ staff? Wrong.
- I have a tax debt? Wrong.
- I will lose my home? Most cases these days that is also wrong.
- I will lose my car? Most cases you can keep your car?
- My partner will be affected he/she owns too much or makes too much money? Wrong.
- I will lose my Centrelink payments? Wrong.
- I will have to go to court? Wrong.
- I will have to sell my furniture and household items? Wrong.
- I will never have the ability to rent a house again? Wrong.
- I will never be able to get a home or car loan again? Wrong.
- I will have all my income taken to pay the debt? Wrong.
- I will have all my income taken to pay the debt? Wrong.
This is just a quick list of reasons or mistaken beliefs about bankruptcy that keep people far from it as an option. 25,000 people a year go bankrupt in Australia. Bankruptcy is a big decision make sure you get the right advice don't enter into it blind.