Myth 1 – Everyone will know about my bankruptcy
Today, more and more people are realising the need to declare themselves bankrupt, but still many feel ashamed about doing so, because they feel embarrassed that others will find out about their financial situation.
But, the assumption that others will know about your bankruptcy, is far from the truth. They won’t know about your situation, unless you tell them yourself, or if they go out of their way to check the public record and pay for it.
Myth 2 – I will lose everything I have
This is a false belief. Legally, the law protects some of your assets, including your clothes, household furniture and your superannuation funds. You are also allowed to keep your car, given that certain legal conditions are met. Apart from these, you can be rest assured, that a dutiful trustee will help you get the most out of your assets.
Myth 3 – I will never be able to borrow again
From the long-term perspective, bankruptcy can actually improve your credit rating. This is because, it can help you improve your cash flow position, and thus reduce the risk for you to default on rent or any mortgage or loan repayments. Given that temporarily bankruptcy will impact your credit rating, for 5 years when it is on your file records, but this doesn’t mean that your credit rating can never improve, especially if you focus on improving your credit file, and using your money wisely.