Bankruptcy and Debtor Rehabilitation: An Australian Empirical Study
Melbourne University Law Review, Vol. 40, No. 3, pp. 688-737, 2017
50 Pages Posted: 22 May 2017
Date Written: May 22, 2017
Bankruptcy is widely regarded as a means of rehabilitation for debtors in severe financial hardship. To date, however, there have been few attempts to study its long term impact on individuals’ finances, health, social relationships and general quality of life. The authors address this gap in the literature, by reporting the results of a major survey of current and former Australian bankrupts and another survey of financial counselors and consumer solicitors. These surveys demonstrate that, for many Australian debtors, bankruptcy results in genuine improvements to financial stability, health, relationships and general well-being. At the same time, they suggest that the outcomes of bankruptcy can vary significantly according to the underlying reasons for a debtor’s financial hardship. In particular, they demonstrate that debtors whose problems relate to unemployment are less likely to achieve favourable outcomes, due to the fact that their post-bankruptcy incomes simply are not high enough to meet their basic needs. On this basis, the article concludes that while bankruptcy offers valuable assistance to many Australian debtors, it is not a comprehensive or fail-safe means of financial rehabilitation.
Keywords: bankruptcy, financial hardship
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