Advantages

Bankruptcy is generally a last resort. However, it can have some advantages, for example:

it wipes the slate clean as far as most debts are concerned. Once a bankrupt is discharged, provable debt incurred before bankruptcy are automatically and totally cancelled with a few exceptions, see debts.
When people enter bankruptcy, some of their property comes under the protection of the Act and cannot be taken away to help pay their debts [Bankruptcy Act 1966 s 116, Bankruptcy Regulations 1996 Reg. 6.03 and 6.04]. This includes necessary household furniture and a primary means of transport eg motor vehicle or motorbike worth less than $5800 (indexed), see property a bankrupt can keep. This means that most ordinary household items can be kept by the bankrupt.
a person cannot be pursued by creditor once the person enters bankruptcy [s 58]. All further communications about the debts should take place between the bankrupt's creditors and trustee.
social security payments are protected under the Act.
The trustee will ask a bankrupt to pay part of his or her income if there is money left over after allowing for all ordinary living expenses, such as rent, food, clothes, and even pocket money for children unless assessed as a compulsory contributor, and then in accordance with the legislation. As many people entering bankruptcy have been paying large portions of their income to creditors, this can be a great relief.
If a bailiff has recently taken away necessary household items to be sold to pay creditors, it may be possible to have them returned once the person enters bankruptcy. If the items have already been sold, it may be possible to have the proceeds of the sale paid to the bankrupt.