There are many consequences of declaring yourself as bankrupt. A lot of them are permanent, so this is a decision you have to make after a lot of careful consideration. Never rush into it, because the stigma associated with it will follow you around for the rest of your life and have an impact on your personal finances as well.
Banks and finance companies can always find you and your information using an AFSA search at any time, and will see that you were once bankrupt. When you declare bankruptcy to the government, there are a few things that may happen, at least some of which are guaranteed to happen. One, a number of your assets might be sold to cover any pressing debts you have outstanding. Your employer may also try to reduce your income or even come to see you as a risk factor. Income from your own business may be affected as well.
Not a Get Out of Jail Free Card
Remember also that bankruptcy is not a way to get out of having to pay your debts. While some debts are cleared when you announce this, a lot of others remain as they are. It is also possible that a number of countries won’t let you travel to them. Australia might choose not to let you out of the country till you are no longer a financial risk. Your details will be added to the NPII for the rest of your days, which is an irreversible and public database. This will directly impact your ability to take out loans from banks and other financial institutions. You will also be assigned a trustee, who will supervise your bankruptcy for as long as it lasts (typically 3 years and a day).
All Your Assets Will Be Sold Off
When it comes to the sale of all your assets, it does not include essentials like food and water. You can also keep enough tools to continue your profession. Your vehicles may be sold, but you might be allowed to keep them depending on their value. Your trustee will usually decide whether or not to sell everything else. This includes your home! You are conducting a criminal offence and might even be prosecuted if you try to hide your property in a different province, country or within your locality.
Your Income May Be Impacted
You may have to donate a portion of regular income that more than the required amount to live in relative comfort towards the clearing of your debts and your bankruptcy status. You will not be allowed to direct or manage a company either. You will have to obtain permission from the local judge to keep managing your own business.
You will be released from a lot of your debt when you do declare bankruptcy and survive it. Some debts will not be removed, though. These include official fines, taxes and child support. However, if you have fraudulently caused a debt to have been released upon bankruptcy being declared when it should not have been so, you are going to have to pay this debt when the period of bankruptcy is over. Always remember that this is something that is going to taint your name forever. Never declare bankruptcy if you have any other choice.