Expert: Compare all the options before declaring bankruptcy

Tuesday 10 August 2010

Article by Mozo

Australians should weigh up all their options before declaring bankruptcy, a specialist has advised.

Carolyn Bond, co-CEO of Melbourne’s Consumer Action Law Centre, observed that some institutions are pressuring people into opting for the bankruptcy route too quickly.

Speaking to the Sydney Morning Herald, she said: “The key thing is to fully understand what will happen if you go bankrupt and balance that against other options you have.

“We are seeing some more aggressive debt collection where people own their own home and are forced into bankruptcy.”

Elsewhere, it was also observed that personal bankruptcies and insolvencies are currently at record levels in Australia, affecting three times as many people as 20 years ago.

Consumers struggling with debt problems could choose to compare credit cards in search of low interest options. Last week, a finance editorial by news.com.au argued that “the muddler” borrower – who gets caught in a “cashflow trap” and ends up building up large debts – should stop using credit in the meantime and consider transferring their balance to a low-interest card before setting up a regular repayment schedule that puts them back in control of their finances.

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