Should I go Bankrupt? It is a question I get asked every day. The answer to this question is far more simple then all the stress surrounding your financial position right now.

If you have a large amount of debt whether that be credit cards, personal loans, ATO debt, personal guarantees from a company failure or some combination of the above you can spend years and literally decades of your life bogged down in a debt cycle of paying enormous interest rates, borrowing more to make repayments. Endlessly watching whatever gains you make in life eaten away by past problems.

To turn this around you have three broad solutions.

1 – Pay all your creditors back.

There are services that offer to negotiate on your behalf or consolidate your loan into one larger loan.

Keep in mind that this solution is going to require a long time (again years upon years) of working hard and spending very little. Also, in the end it may not even be possible. It may only serve to delay the problem where in the meantime your finances and health have declined.

2 – Enter into a Debt Agreement

This involves getting creditors to accept a deal whereby you will repay a certain amount of the face value of the debt back.

Usually the amount is approximately 70 cents in the dollar. If you owe $80,000 you are looking at paying $56,000 over the next couple of years. This amount can be a bit steep for someone trying to start their life over again.

This option will solve your issue of stopping debt collectors from hounding you but it also has a few disadvantages:-

  • The cost of 70 cents in the dollar can be hard to swallow when you are looking for a fresh start and could declare bankruptcy.
  • Eligibility, if you earn over $83,169.45 * or if you have unsecured creditors or unsecured assets exceeding $110,892.60 * you can not propose a debt agreement.
  • If you lose your job or circumstances change you still have to honour your proposal.

3 – Bankruptcy

Saving the best for last, Bankruptcy will:-

  • Immediately stop all debt collectors from pursuing you. Debt collectors will have to deal with your Bankruptcy Trustee.
  • No financial eligibility requirements, no matter how large the amount of money you owe or how much money you earn you can go bankrupt.
  • Any further repayments to creditors are determined by your income and change with your income situation. You can earn up to $55,446.30 in the hand with no kids or $74,298.04 with four kids before having to repay any monies.
  • Set time frame.

Please give me a call on 1300 833 183 for a confidential free chat about your position. I want to help you.


The most important thing is to know that there are options and your life will dramatically improve once the financial stress is taken away.

For my next installment I will go into more detail about – how you go bankrupt.

Josh Taylor


* figures are subject to change by the Australian Financial Security Authority twice per year.

Go fromCreditors calling day and night? to Bankruptcy helping you start over

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