Bankruptcy is often perceived as a financial death sentence, but the truth is far from that. At O’Brien Palmer, we’ve walked hundreds of individuals through bankruptcy, and one of the most common questions we hear is: “What does this actually mean for my life and my family?”
The short answer? It’s not as bad as you think.
This week, Liam Bailey dives into the realities of bankruptcy, separating fact from fiction, and offering real reassurance to those feeling trapped by mounting debts.
What Really Happens When You Declare Bankruptcy?
Bankruptcy isn’t a punishment. A trustee’s role is to administer your financial estate in accordance with the law, not to shame or restrict your ability to live.
“You’re not a company. You don’t just cease to exist. We’re here to help you rebuild, not punish you.”
Liam Bailey
Here’s what you can expect when you go bankrupt:
1. You Keep Living Your Life
- Bank accounts stay open, you still receive income and pay bills.
- You can keep your car if the equity in it is under $9,600.
- You’re allowed to earn an income, and encouraged to do so.
2. The Bankruptcy Form Is the First Step
- It details your income, assets, debts, trusts, dependents, and business interests.
- If court-ordered, you must submit the form within 14 days.
- We help you fill it out, it’s long and can look overwhelming, but it’s not hard and feels like a relief when it is completed.
3. Income Thresholds Matter
- Most people will never be required to make payments to the estate.
- You can earn up to $72,000 (net) before income contributions kick in, and that rises to $86,000 if you support a child.
4. Some Legal Restrictions
- You can’t be a company director during bankruptcy.
- You must disclose your status to a creditor if borrowing over $7,000.
- You must get permission to travel overseas, which is often granted.
Don’t Ignore the Emotional Side
We know that there can be a lot of strong emotions triggered when you declare yourself bankrupt, and we strongly encourage individuals to seek mental health support. We’ve listed trusted resources on our site below, and if you need further support, please reach out personally:
The Personal Impact of Financial Distress on Your Mental Health and Wellbeing
https://obp.com.au/mental_health_resource/
Technical Guide: Bankruptcy
https://obp.com.au/bankruptcy/
Technical Guide: Alternatives to Bankruptcy
https://obp.com.au/alternatives-to-bankruptcy/
“People think it’s going to be the end of the world… But when the phone stops ringing and the stress starts to fade, the sense of relief is overwhelming.”
Liam Bailey
Many clients say the same thing: “I wish I did it sooner.”
Need to Talk?
If you’re overwhelmed and need to understand your options, our team is here. We’ll explain your rights, your responsibilities, and help you take the first steps toward recovery.
📞 Call: 1300 545 133
📧 Email: obp1@obp.com.au
🌐 Visit: https://obp.com.au