Bankruptcy and Debtor Rehabilitation: An Australian Empirical Study

Melbourne University Law Review, Vol. 40, No. 3, pp. 688-737, 2017

U of Melbourne Legal Studies Research Paper No. 754

50 Pages Posted: 22 May 2017

See all articles by Paul Ali

Paul Ali

University of Melbourne - Law School

Lucinda O'Brien

Melbourne Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Date Written: May 22, 2017

Abstract

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

Suggested Citation

Ali, Paul and O'Brien, Lucinda and Ramsay, Ian, Bankruptcy and Debtor Rehabilitation: An Australian Empirical Study (May 22, 2017). Melbourne University Law Review, Vol. 40, No. 3, pp. 688-737, 2017; U of Melbourne Legal Studies Research Paper No. 754. Available at SSRN: https://ssrn.com/abstract=2971865

Paul Ali

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 1088 (Phone)
+61 3 8344 5285 (Fax)

HOME PAGE: http://www.law.unimelb.edu.au

Lucinda O'Brien

Melbourne Law School ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

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