o relieves debtors from the pressure of creditors.
o allows debtors to make a "clean start" after discharge.
o allows debtors to retain a living wage during bankruptcy - they may be better off than where their wages are the subject of a garnishee order under a judgment (or property is seized under a writ)
o dispositions of property (e.g. to a spouse) may be "clawed back" by a trustee.
o debtor loses freedom of travel.
o debtor loses control of property.
o credit rating severely compromised
o debtor has to contribute income exceeding a living wage to creditors.
o debtor is subject to public examination.
o most effective debt collection mechanism - debtors often pay rather than go bankrupt
o debtor may have to contribute some post bankruptcy income to creditors
o property disposed of by the debtor before bankruptcy can be "clawed back" to satisfy debts.
o debtor and others can be examined to trace assets/income.
o allows creditors participate equally the estate, rather than one creditor getting all
o process can be slow
o a creditor who has received a preference may have to pay it back; pre-bankruptcy dispositions may be "clawed back".
o ITSA charges a "realisations charge" of 8% of estate
o legal costs to obtain a Sequestration Order
o some trustees make lawyers look cheap.
o the petioning creditor has to share assets with other creditors, instead of recovering the debt by themselves and waiting to see whether a trustee will challenge the recovery later.