Bankruptcy

What is bankruptcy?

Bankruptcy is a legal process where a person who can’t pay their debts must give up their assets and control of their finances to a trustee. The trustee will divide your assets to people you owe money to (creditors). 

If you are made bankrupt, it means that you are protected from further legal action against you by creditors.

A bankruptcy lasts for three years and one day from when:

• your Statement of Affairs is accepted by the Australian Financial Security Authority (AFSA), or
• the date the Statement of Affairs was filed for an involuntary bankruptcy. 

Your name will permanently appear on the National Personal Insolvency Index and appear in your credit report for five years. 

Who can apply

If you have multiple debts, you can enter into voluntary bankruptcy. 

There is no fee to apply for bankruptcy. 

For more information, see Check my eligibility on the Australian Financial Security Authority (AFSA) website.

What debts are not covered by bankruptcy?

Some debts still need to be paid even if you are made bankrupt. These include:

• court imposed penalties and fines
  
• child support & maintenance
  
• HECS & HELP debts (government student loans)
  
• debts you incur after your bankruptcy begins
  
• unliquidated debts.

This means you are still liable for these debts. You need to contact your creditors directly to discuss payment options.

For more information, see What happens to my debts? on AFSA website.

Where can I get help?

Before considering bankruptcy, you should speak to a free financial counsellor from the National Debt Helpline on 1800 007 007 and discuss your options.

Aboriginal and Torres Strait Islander peoples can call the Mob Strong Debt Helpline on 1800 808 488. The helpline is open Monday to Friday, 9:30am to 4:30pm.

What happens when you are made bankrupt?

When you are made bankrupt, you will be appointed with a registered trustee to manage your bankruptcy.  Some of your assets may be sold to pay the debts. There are certain rules you must follow when you are bankrupt.

For more information, see Consequences of bankruptcy on the AFSA website.