The consequences of going bankrupt
While bankruptcy may help pay off your debts, there are certain consequences which you might have to suffer as a result. The following are a few consequences which you should know of to be sure that bankruptcy is actually an option for you.
A trustee would help you manage your bankruptcy
The person who will help you manage your debts is known as a trustee. They work along with you and your creditors to ensure that you can pay off the debt. You are obligated to provide all the information to your trustee. Information regarding your current financial situation and all those incidences which led to you becoming bankrupt. You would have to provide all your account books, bank statements and any other financial documents which the trustee asks you to provide.
If you voluntarily filing for bankruptcy you have an option of appointing a trustee whom you already know. If you are unable to nominate someone then you would be appointed another trustee.
Bankruptcy might have an adverse impact on your job, income and employment
If you earn a certain amount of money, your trustee may require you to make a set amount of payment each month to cover your debt and pay off your creditors. Plus if you run a business or work in certain job positions, you might suffer consequences on those as well.
It won’t help you get rid of all your debt
It’s a known fact that while bankruptcy can help you get rid of some of the debts, it won’t help you for all the debt that you owe. It doesn’t cover any of the following debts
- Penalties and fines which are imposed by the court
- It doesn’t cover child support and maintenance
- Government student loans
- Debts which you may incur after the bankruptcy
- Debts which are not Liquidated debts
It would impact on your ability to travel overseas
You would need to get permission from your trustee if you plan to travel oversea. It is illegal for you to travel without having a written consent from your trustee.
Your name would be permanently listed in on national personal insolvency index
All credit reporting agencies would keep a record of your bankruptcy, five s from the date you go bankrupt. Your name would also appear permanently on the public records of national personal insolvency index.
You may have to sell your assets
When you file for bankruptcy you would have to sell your assets to pay off your creditors. Your trustee would sell your home or any other property that you own to cover the amount of cash you have to pay. Though you may be allowed to keep some of the assets which belong to you, most of these would still need to be sold off. When you file for bankruptcy you may have to declare all your assets.
On the other hand you may also lose the right to fight a legal battle. For this you need to find out whether the court would allow you to lodge a legal issue or not.