Often when chasing debtors we get a standard response “I’ll just go bankrupt then and you will get nothing”.

You can shake the debtor’s confidence in this line if you spell out the consequences of bankruptcy.

Here are nine negative consequences you can tell them about:

1. They are likely to be refused future credit by stores and banks because a past bankruptcy is one of the strongest indicators of a bad credit risk as their bad financial habits may continue.  Therefore they are unlikely to be able to buy on hire purchase or get a loan for a house or a car.
2. The bankruptcy will usually remain in place for three years.  The bankruptcy stigma is forever.  It will be lodged on the Baycorp database and remain there for seven years.  It is also lodged on the searchable insolvency database maintained by the Companies Office and remains there forever.
3. Their bankruptcy will be advertised in the public notices section of the local newspaper.  The stigma will be known to the whole community.
4. The bankrupt is only allowed to retain limited personal belongings and tools of trade and an allowance for the bankrupt and his or her family to live on.  The Government controls all their finances.
5. The bankrupt’s bank may well close their accounts and secured creditors may repossess their securities (e.g. hire purchases and vehicles) even if they are not in arrears.  They will lose the use of the car and couch and when sold secondhand will get little credit for them.
6. The Government may take money out of their wages or income towards their debts for three years.
7. Their house, if they have one, is likely to be sold.
8. If they win lotto or inherit money it can be taken to pay creditors.
9. They are not allowed to travel overseas without the permission of the Government and their creditors.

Bankruptcy is not the easy way out many believe and telling them the consequences can help get you money out of their pocket and into your bank account where it belongs.