In Australia, you can start recovering fairly quickly from the trauma and stress of the days and weeks and months, and sometimes years of worry leading up to the time of actually making the decision to go bankrupt, and doing it.

Declaring yourself bankrupt, never let a creditor send you bankrupt, is a very big step, one of the biggest that you’re likely to take in your lifetime.

It can be a very lonely step too, because you are not likely to have confided in too many of your family and friends about your actual financial position in the time leading up to making the decision, the bankruptcy step.

Fortunately, having made the decision, it doesn’t take long for the formalities to be completed. Without having to go to court, you can actually become bankrupt and out of debt in about a week.

Most bankruptcies in Australia are not business related either.

The majority of people who declare themselves bankrupt are just ordinary people who, due to some unforeseen happening, now find that the wheels have fallen off and so they can’t pay their debts off at the rate and in the time frame expected demanded, of them.

Most are in a job, and most have looked at the so called alternatives on offer, like Debt Agreement Proposals, and have realized that these are not the answer that they are promoted to be.

After researching bankruptcy, and it sometimes takes a bit of courage to take that step, people facing bankruptcy are often surprised to find that there is life after bankruptcy.

Most didn’t know for example that as a bankrupt, in Australia the minimum amount of their weekly salary or wage that they can keep, in other words it can’t be touched by a creditor or their bankruptcy trustee, is $771 75 per week as at 1st April 2008.

That’s called the theshold Amount. This amount gets adjusted each March and September.

The minimum $758.80 is also net, after tax and after paying child support, if that is applicable. In other words, it’s the bankrupt’s weekly spending money.

That’s also assuming that the bankrupt has no dependants. If there are dependants then the amount is more, there’s a sliding scale. For example, with one dependant the minimum amount of net wage that that a bankrupt can earn and keep is $910.67 cents per week (net don’t forget), and with four dependants it is $1,034.15 (net) per week.

The Australian Government intends that a bankrupt does have the chance to recover, and to have a reasonable amount of retainable income on which to decently live, and to be able to start to recover from whatever went wrong to cause the bankruptcy.

If a bankrupt earns more than the net theshold Amount applicable to them, taking into account the number of dependants that they have, then during the three years of the bankruptcy the bankruptcy trustee can only require the bankrupt to contribute 50% of the net weekly wage that goes over the theshold Amount, to their bankruptcy.

These theshold Amounts and the 50% of the excess requirement only applies for the three year term of the bankruptcy. After that the now ex bankrupt can keep all of their income.

If during the 3 years of their bankruptcy, a bankrupt saves and then buys an asset like a speedboat for example, then the bankruptcy trustee can claim and sell the speedboat because it’s no longer their income that they haven’t yet spent, nor is it the sort of asset that a bankrupt can own in that time.

The bankruptcy trustee cannot claim any savings that the bankrupt generates out of this income, provided the amounts stay in the account that the salary or wage went into on day 1.

Bankrupts need not fear that they will lose many, if any, of their personal possessions either.

As a bankrupt you can retain tools of trade with a second hand value of up to $3,150.

You can keep a vehicle that a dealer would pay you no more than $6,300 if you wanted to sell it to him for cash. If it’s secured by a Bill of Sale, then you can keep it as far as the bankruptcy trustee is concerned, if piece of equity in the car is no more than $6,300.

For income threshold purposes, you can claim a person as a dependant provided their separate net income is no more than $2,834.

So you see, bankruptcy really does allow ordinary people to get out of debt, to get back on their feet, and so be able to get on with their lives.

OK perhaps the above headline might be accused as being slightly on the sensationalist side of things but go with me slightly as I explain my reasoning and the logic behind such a potentially controversial headline.

The core message put out recently by the UK Governments Insolvency Service was that a record number of people in the UK were made officially insolvent between July and September 2006.

The Governments Insolvency Service claimed that 27,644 people were either made bankrupt or entered into an Individual Voluntary Arrangement (IVA) as a way to control or manage their debts in an ordered fashion.

It was too early obviously to know how big a percentage of those who entered into an IVA had it failed by their manager or supervisor but it has been claimed previously that in some cases up to 50/60 percent of those entering an IVA fail to complete it in an orderly manner and therefore find themselves being made forcibly bankrupt at a later date.

The other key statistic was that insolvencies were apparently 55% higher than during the comparable period this time last year and the smart money (to spoil the metaphor) is on the figure topping the 100,000 mark for the year.

Add to that the latest trend in Lifelong Mortgages whereby the Lender gives the Borrower up to 57 years to repay the mortgage and will extend up to 5 times the borrowers annual income on a LTV basis then you can see where it would be very easy to over extend oneself.

It would appear that the proportion of those applying for and entering IVAs rose as compared to those deciding (or having decided for them) to go down the straight bankruptcy route. This latter fact has been heavily criticised (and understandably so) by the mainstream press as the process of an IVA or (Chapter 13 Bankruptcy, its equivalent in the US) is very heavily marketed as the ultimate solution to provide the maintenance of the maximum amount of dignity in an otherwise sordid scenario.

This is not entirely the case and is most certainly not always true. Whilst the principle of an IVA is fine and extremely noble, sometimes it is just not practical and therefore should be counselled against at the earliest opportunity. That is not to say that IVAs are a totally worthless idea in principle.

In the right circumstances they are ideal and managed correctly work extremely well for those who enter into the process with their eyes firmly open. Sadly this is not always the case and most often the reality is the exact opposite.

Did you know that 329 people will be declared bankrupt or insolvent today? And that this number will rise to approximately 429 people per day by the end of 2009?

It is not surprising when you consider that approximately 8 million people in the UK are suffering with excessive debt due to a number of reasons. With 2,915 people becoming redundant every day during the 3 months to end January 2009, it is little wonder that this level of bankruptcies is arising.

So what are the main benefits and drawbacks of going bankrupt? And are there any real alternatives for many people?

What are the main advantages for you of going bankrupt?

* For most people bankruptcy provides immediate peace of mind as the problem is effectively taken out of your hands

* It is possible that you will be automatically discharged after one year (or less in some cases), though you will generally continue to have an attachment to earnings for a further 2 years. * No more letter, harassment or phone calls from your creditors.

What are the main negative implications for you of going bankrupt?

* You will lose control of all of your main assets, such as your house, car, jewellery, etc.

* You will not be able to obtain a loan or credit for over £250 (without the permission of the lender).

* You can no longer act as a company director.

* You cannot take any part in the formation, promotion or management of a limited company without first obtaining the permission of the court.

* You can only trade in a business under another name if you inform all persons concerned of your bankruptcy.

* You may no longer practice as a Lawyer / Charted Accountant.

* Your credit will be affected for many years after you have been discharged.

* You are not permitted to act as a Justice of the peace.

* You are not permitted to become a member of parliament.

* You are not permitted to become a member of the local authority.

* You could be publicly examined in court (though this is not usual).

* If your current home rental contract prohibits bankrupt individuals from renting the house, you could be evicted from your home.

* You will find it difficult to rent a house through any major letting agent.

So there are a number of things to consider when you are thinking that bankruptcy is the best option for you and there are a number of alternatives for many people that would normally have gone bankrupt.

* Debt management

* Independent Voluntary Arrangement

* Debt consolidation

* Legal debt write-off

The biggest issue really for most people is that they do not know which is the best way to go for them and they think that bankruptcy is a quick fix. In some cases bankruptcy is the only option, but for many a multi pronged approach to the problem is far better.

There are a number of option available under the Consumer Credit Act 2006 to enable you to pay as little as £20 per month to a creditor and they must accept if you can show them that you are suffering anxiety and stress from the debts you have. This is all thanks to the unfair relationships section which gives a great deal of power to you.

It could be that some of your creditors do not have the legal right to the money they are demanding. This is where legal debt write-off is useful it can be used to get you debts completely written off.

An Independent Voluntary Arrangement ( IVA) is a very popular method of cutting your debts and getting out of debt within 5 years, but it is not available to everyone and the failure rate can be high with people who do not have a guaranteed stable monthly income throughout the 5 year period.

Debt consolidation does not have a very good success rate as many individuals are then free to take out more debt and actually get targeted by the banks as a prospective good customer.

It is never easy to find a one-size-fits-all approach to personal debt clearance and the best approach is to look for a middle path. It maybe that you can get some of your debts written-off, whilst you may consolidate other and free up cash to pay-off secured loans more quickly.

It is important to realise though that some of your debts need not be paid at all if the bank did not perform their duties to you properly and left you in a disadvantaged position. The correct legal advice on that subject is vital!

Whatever your circumstances, finding out your options and getting advice about all these possibilities is a must before you decide to go bankrupt.