Yes, you can recover from bankruptcy, but it is a serious situation and you need to understand what filing for bankruptcy involves and what it means for your future to be bankrupt. In the following sections we aim to give you as much bankruptcy information as possible to enable to you make the right choice at this difficult time.

Bankruptcy Explained

Bankruptcy is when someone who owes money (a debtor) declares that they are unable to repay their debts. What makes declaring bankruptcy such as serious decision is that is it a legal process and once the procedure has begun, certain criteria must be fulfilled by law. On the upside, officially announcing yourself bankrupt and so bound by a legal process also gives the debtor a certain amount of legal protection, as long as they follow the correct steps.

Becoming bankrupt should not destroy your life, but it is a major decision with important consequences, so it is not something that you should rush into. For more information on the other options that may be open to you, please check the next page on www.bankruptcy.com.au called Alternatives.

However, if you sure you are facing bankruptcy, there are 2 main ways forward:

Voluntary Bankruptcy – where the debtor realizes that they cannot repay their debts and decides to complete and lodge bankruptcy documents of their own free will.

Involuntary Bankruptcy – where the bankruptcy procedure is set in motion by a court order. This usually happens when a creditor, tired of waiting for the money that they are owed, starts the process against their debtor to get their money back. It is important to note that a creditor may only be owed $2,000 to start bankruptcy proceedings.

Declaring Bankruptcy

Filing for bankruptcy is a pretty straightforward process. You are required to make a petition to the Trustee Service of Australia (ITSA) and submit the following documents:

* A debtor's petition

* A current financial statement

* A signed agreement that you have received and read the ITSA's Prescribed Information Booklet.

Declaring bankruptcy is free. However, if you decide to act through a registered trustee, you will have to pay for their services. Clearly, paying someone's fees can be a challenge when you are in debt, so there is flexibility to cover those fees out of a property sale, should your creditors agree.

Usually, your state of bankruptcy will last for 36 months. However, this depends on you reaching an agreement with your creditors and meeting all the terms stated within it. If you fail to fulfill the obligations of the agreement, your bankruptcy may be extended for another 24 months, or even up to 8 years.

Bankruptcy Consequences

Bankruptcy happens for many reasons – often something as simple as losing your job at a time when bills and medical expenses are mounting up. Becoming officially bankrupt should not affect things like your employment chances, unless you are in a profession that requires a license, such as real estate agent, tax agent, builder, or if you are in the police or something similar.

In most cases, filing for bankruptcy means that, as long as you meet your scheduled loan repayments, creditors cannot take your assets. However, you still have to repay other separate loan expenses such as:

* Child Support

* HECS Payments

* Household and Commercial Rates

* Court Fines and Penalties

Given that declaring bankruptcy is such a major step, you should always consult a financial advisor and expert in the field to ensure that you make the most informed decision possible. There are plenty of bankruptcy lawyers who specialize in this area, as well as a number of debt solution companies offering professional debt consolidation and bankruptcy advice, so talk to someone before you decide. There are a number of companies advertising on this website who can give you the most up-to-date advice available, such as Fox Symes, so why not give one of them a go?