Facing personal bankruptcy can be a daunting and stressful time for anyone in financial distress.

Are there any alternatives to avoid bankruptcy?

People who find themselves in serious financial difficulty generally think of bankruptcy as their only option, and one to be avoided at all costs. This can create an unnecessary amount of fear and stress for those who are already under a lot of pressure, because for some people, bankruptcy is often not as bad as it is made out to be. More importantly though, it is not the only available option for settling unmanageable debt. Many people do not know this, but you may also have the option of entering into a Debt Agreement or a Personal Insolvency Agreement.

Debt Agreements and Personal Insolvency Agreements are initiatives that were created by the Australian Government to help indebted Australians avoid bankruptcy. Before they came into play, if you were in debt you had two options: find a way to pay it in full, or declare yourself bankrupt. Debt Agreements and Personal Insolvency Agreements allow a person to pay back a percentage of their unsecured debt as opposed to becoming entirely bankrupt, and as such, can allow a person to hold onto the income and assets they would lose if they declared bankruptcy.

To put one of these agreements forward you must first seek the services of a professional, who will determine which of them you are eligible for. They are both similar in their purpose, but which one you can do will depend on your income, your debt level, and any assets that you may have. They will then determine your affordability by going through a household budget with you, and calculating the percentage return your creditors would get if you gave them the amount that you can afford. Your offer is then put to your creditors, and if it is accepted by the majority it becomes binding on all of them. Your debt is frozen, with no added interest, and once you pay the amount you have pledged you are legally released from your unsecured debts.

These agreements also come with consequences, in that doing one will put a mark on your credit file, but they can be a good alternative for those who need formal assistance with their debt, but don’t necessarily have to go bankrupt. To propose a Debt Agreement you need the help of a Debt Agreement Administrator, and for a Personal Insolvency Agreement, a Registered Trustee. Our company is equipped with both, which means that we are able to help you with Bankruptcy, Debt Agreements, and Personal Insolvency Agreements. Call 1800 462 767 today to find out if you can avoid Bankruptcy with an alternative arrangement.

Are there offences under bankruptcy?

Bankruptcy offences.

  • disposing of property before bankruptcy with intent to defeat your creditors;
  • failure to disclose assets;
  • leaving Australia without your Bankruptcy Trustee’s permission;
  • obtaining of credit when you know you cannot repay it;
  • incurring debts during bankruptcy over $6,893 without disclosing that you are bankrupt;
  • operating a business under an assumed name, without advising your bankruptcy; and
  • leaving Australia without the trustee’s permission.

The penalties for the above offences vary from 6 months to 3 years imprisonment.

Bankruptcy – What is it?

Bankruptcy is a government legislated process that is designed to create a fair outcome for all involved when someone is unable to honour their debts. For the individual, it provides relief from the stresses of unmanageable debt and legal protection from their creditors. It also helps the creditors, in that it creates a system by which any recoverable funds are distributed equitably. To declare yourself Bankrupt in Australia you need to be a permanent resident, and be insolvent, which simply means that you are unable to pay your debts as they fall due.

The Bankruptcy process begins when the appropriate paperwork is lodged with the Australian Financial Security Authority (AFSA) and you are appointed a Bankruptcy Trustee. Depending on how the Bankruptcy has come about, this can be either a private Registered Trustee, or AFSA. From this point on, both you as the Bankrupt person and your Trustee have certain obligations. The Trustee has to investigate your financial affairs and determine whether there are any funds that can go toward your Bankrupt Estate, either from the sale of assets that have available equity, or if you earn enough, contributions from your income. Your responsibility is to assist these investigations, by truthfully disclosing such aspects of your financial situation, and providing your Trustee with any information and documentary evidence that they require. If any funds do become available in your Bankrupt Estate they are distributed to your creditors by your Trustee, with each creditor receiving the same percentage of their provable debt.

The Bankruptcy process usually lasts for three years, which means that all income and assets that you acquire during this time, as well as any assets you may have sold or transferred before your Bankruptcy began, are subject to investigation by your Trustee. Most people are discharged from their Bankruptcy after three years; in some circumstances though, such as when you don’t comply with your Trustee’s requests, an objection to your discharge can be lodged. This can extend the term of your Bankruptcy to five, or even eight years. Once you are discharged from your Bankruptcy you are released from those debts that were included in it – note that Bankruptcy does not stop any secured creditors from realising their security, and it does not release you from certain debts such as fines and Child Support.

Bankruptcy is a serious step and as such, you should not make any decisions before seeking professional advice. Our consultants have years of experience in dispensing Bankruptcy advice, and our company is run by a Registered Trustee in Bankruptcy. Call the Australian Bankruptcy Service today on 1800 462 767 and ensure that it is going to be the right decision for you and your financial needs.

Can a creditor still contact me insisting on payment once I have become bankrupt?

When you become bankrupt, you are released from those debts that are known as “provable debts”. A provable debt is a debt that you are liable for, or will potentially become liable for, at the time that you are declared bankrupt. If you have a provable debt with a creditor they are no longer able to contact you and demand payment for that debt.

This does not mean that you are released from all of your debts. Certain debts are not “provable” in Bankruptcy, such as child support and some fines. If you go bankrupt, you will still need to organise payment for these sorts of debts.

Another aspect of the Bankruptcy Act is that it does not stop secured creditors from realising their security. Secured creditors are those that are able to sell some sort of asset attached to the debt if you do not pay it, such as a home or a vehicle. If you go bankrupt and you have secured debts, you can continue to pay them in order to keep possession of the asset, so long as the asset does not have available equity in it that is over an allowed amount. If you do not continue to pay it, the secured creditor can repossess and sell the asset. If there is still an amount left over after selling the asset, then any “shortfall amount” will become “provable” in your bankruptcy, and the creditor will not be able to demand that you pay it.

The most common provable debts are unsecured debts such as credit cards, personal loans and store cards. If any such creditor contacts you after you have been made bankrupt, you should immediately refer them to your Bankruptcy Trustee. You should note, though, that if any debts are in joint names, the other party will continue to be chased for payment. Also, bankruptcy only covers those debts that you are liable for (either currently or contingently) as at the date that you go bankrupt – any debts incurred after that date will remain your responsibility, and those creditors will still be able to contact you for payment.

For more information on your rights and obligations as a bankrupt person, and on what sorts of creditors you will be protected from under bankruptcy, call the Australian Bankruptcy Service today on 1800 462 767. We are available 24 hours a day, 7 days a week.

Can I be forced into bankruptcy if I don’t pay my bills?

Many people are threatened with bankruptcy by their creditors when they are unable to make their payments, and sometimes it is hard to know whether it is just a threat, or a potential reality. The safe answer is yes, a creditor can force you into bankruptcy – but there are certain conditions and processes to be met first.

A creditor can only petition to have you made bankrupt if you owe them at least $5,000 and they have a court judgement to back up the debt. Of course, this does not mean that you can neglect your smaller bills; it is quite easy for a debt to increase with interest and charges.

When a creditor has good cause to petition for your bankruptcy they will first need to apply to court for a judgement to be issued.  If after some time the judgement remains unpaid, they can then apply to AFSA for a Bankruptcy Notice to be issued against you. You will have 21 days to respond to a bankruptcy notice and payment in full is the only way to stop a creditor from proceeding to the next step. If you do not pay within 21 days, then the creditor can apply to the court for a Creditor’s Petition to be issued. When the due date for the Creditor’s Petition runs out with no satisfactory response, you will then be made bankrupt by the court and a Bankruptcy Trustee will be appointed to you.

If you are receiving demands for payment that you cannot meet, you should call us here at the Australian Bankruptcy Service for advice. It could be that your creditors will soon begin the process of having you made bankrupt. And if you have already received a Bankruptcy Notice or a Creditor’s Petition, it is vital that you get professional help before time runs out. We can advise you of the entire process and what is likely to happen, and in some circumstances, we may even be able to help prevent bankruptcy by proposing another arrangement. Don’t delay and call us today on 1800 462 767.

Can I be made bankrupt by a court order?

A creditor can force you into bankruptcy by approaching the court for a bankruptcy order (or sequestration order) to be issued.  This type of bankruptcy is known as a Creditor’s Petition.

The first step toward making you bankrupt is to issue you with a Bankruptcy Notice, which usually allows you 21 days to respond. If you do not respond satisfactorily they can then go on to file the Creditor’s Petition, and it is this that will actually make you Bankrupt when the Court hears the petition.

A creditor can file a Creditor’s Petition if:

  • you owe them at least $5,000;
  • a Court has issued a judgement to support the debt; and
  • a Bankruptcy notice has been issued and after 21 days the debt remains unpaid.

If you are made bankrupt by way of a Court order, you will have no control over who your Bankruptcy Trustee is. The petitioning creditor will usually nominate a Registered Trustee of their choosing, in which case they will have a signed Consent to Act as Trustee ready for the day you are made Bankrupt. If they do not have a Consent to Act from a Trustee, the Official Trustee from AFSA will automatically be appointed. They can then either keep the appointment or outsource it to a Registered Trustee of their choosing.

If you are issued with a bankruptcy notice and a Creditor’s Petition, there is not much that you can do to stop it. Depending on your circumstances though, you might have an option to avoid bankruptcy, which is to propose a Debt Agreement or Personal Insolvency Agreement instead. Either of these will involve paying back a percentage of your debt, a higher percentage than what your creditors would get if they made you Bankrupt. They take time to set up and come with their own sets of advantages and disadvantages, and so you will need to discuss the option with a professional first.

Are you in the process of being made bankrupt by Court order? Call us straight away for confidential and obligation-free advice. We will be able to inform you of the process and the consequences of what you are about to go through, and if you do have the option of halting the Bankruptcy proceedings with some other form of arrangement, we will be able to assist you with this.

Call the Australian Bankruptcy Service today on 1800 462 767 if you want to try and avoid being made bankrupt by a court order.

Can I buy any assets whilst I am bankrupt?

The purpose of bankruptcy is to ensure that any funds that can be put towards your debts are distributed fairly to your creditors. If you do not have any funds, they will not get anything – if you do, though, it is your Bankruptcy Trustee’s job to ensure that they are realised and spread out accordingly. Funds for your bankrupt estate can come from your income and any assets that you have. During the period that you are bankrupt, which is usually three years, these funds must be declared to your Trustee and surrendered if requested.

When you first become bankrupt you must disclose to your Trustee any assets that you currently own or have previously sold or transferred, and these may need to be surrendered. Any assets that you purchase or acquire after you first become bankrupt, but still within the period of the bankruptcy, are known as “after acquired property”. After acquired property can be something tangible, like a house or a car, but also liquid, as in a lottery winning or a gift. If you come into possession of anything at all while you are an undischarged bankrupt, as in cash or property from an inheritance, bequest, gift or lottery winnings, you must tell your Trustee and surrender it to them.

If you were to save any of your income, and that income has previously been declared to your Trustee and assessed, it does not count as “after acquired property” and you can keep those savings. But if you were to then purchase an asset with those savings, it would technically be after acquired property and you would need to surrender it. So whilst you can buy assets while you are bankrupt, you would not be able to keep them – it is best, then, to wait until you have been discharged.

For more information on how bankruptcy affects your assets you can call us on 1800 462 767. Our consultants have years of experience giving bankruptcy advice, and are led by a Registered Trustee in Bankruptcy.

Can I declare bankruptcy from overseas?

It is relatively common for people to find themselves with debts in another country that they are unable to pay. We have had numerous calls from people who are overseas asking if they can declare themselves bankrupt in Australia.

To be able to declare bankruptcy in Australia:

  • your debts must be Australian ones;
  • you must be insolvent, ie. unable to pay your debts as and when they fall due; and
  • you must be a permanent resident with an Australian address.

You also need to be physically present in Australia to go through the process of applying for bankruptcy. If you are overseas, then, you will have to return to Australia in order to declare bankruptcy.

Once you have become a bankrupt person in Australia you would then need your Bankruptcy Trustee’s permission to return overseas. To apply for such permission you would need to tell your Trustee why you need to be overseas, how the travel is being funded, and when you will return. If you are working overseas and are given permission to do so, you will need to report your income to your trustee.

The decision to allow a bankrupt person to travel overseas rests solely with the Trustee in Bankruptcy, and so an assurance that it will be allowed should never be assumed. If the Trustee has good reason to deny your request you would need to remain in Australia. To leave the country without your Trustee’s permission whilst bankrupt is an offence under the Bankruptcy Act.

If you are currently overseas and struggling with debts in Australia, contact us to talk about your options. If you are unable to call any of our numbers you can submit an online enquiry through our website, and we can chat via email or make a time to Skype.

Can I incur credit as a bankrupt?

Another hurdle to gaining more credit, and one that is extremely important to know, is that you are actually restricted from applying for credit over a certain amount. If you do apply for credit over the threshold amount, which is currently $6,893 (as at March 2024), you must declare that you are a Bankrupt person. If you do not disclose your Bankrupt status you will be deemed to have committed an offence, and you could be prosecuted.

Can I keep any assets if I go bankrupt?

You are allowed to keep, however, a vehicle that is worth up to the protected threshold, which is currently set at $9,100. If your vehicle is worth more than this, the Trustee would need to sell it for what it is worth, but they would then return the protected amount of $9,100 to you for the purchase of a lesser valued vehicle. You can keep tools of trade up to the amount of $4,200 so that you can continue to carry on your trade.




Can I keep my tax refund if I go bankrupt?

When you are first declared bankrupt you must disclose to your Bankruptcy Trustee all assets that you both currently hold, and expect to come into possession of. This includes any tax returns that you expect to receive, and depending on the date of your bankruptcy and how up to date your tax declarations are, you may be required to surrender your latest return.

The Bankruptcy Act deals with your tax matters in two time periods; there is the tax paid on income before the date that you are made bankrupt, and then for any periods after that date and during the term of your bankruptcy.

When you submit a tax assessment for income earned and tax paid before the date of bankruptcy, any return that you get is surrendered to your Trustee and put toward your bankrupt estate. If you end up owing an amount based on this “before date of bankruptcy” period, that debt gets included in your bankruptcy and you are not required to pay it. You need to note, however, that the Australian Taxation Office won’t actually consider you to be released from that debt until you have been discharged from bankruptcy (which is usually after three years, although it can be extended under certain circumstances). So although you won’t be required to pay it, any tax return that you receive during the period of your bankruptcy will most likely be held by the ATO and put toward the debt.

For tax assessments for income earned and tax paid after the date that you are declared bankrupt, any return that you get (unless it is held by the ATO for a previous debt) is counted toward your annual income. Your Bankruptcy Trustee assesses your income every year to see if you are liable to contribute payments to your bankruptcy. If you become liable for a tax debt after the date of your bankruptcy, you will be deemed responsible for that debt and you will be required to pay it.

Dealing with taxation matters under bankruptcy can be complicated, especially if you are declared bankrupt partway through the financial year or are behind in submitting your tax returns. For the best advice, call us here at the Australian Bankruptcy Service. Our CEO is a Registered Trustee in Bankruptcy, so you can call us with confidence, knowing that you will be getting the best advice. Our consultants are available now on 1800 462 767.

Can I run a business as a Bankrupt?

Everyone needs to be able to earn a living, and if you run your own business, you might be concerned that bankruptcy will stop you from being able to do so. The good news is that you can still run a business as a bankrupt person. You might find, though, that you have to do things a little differently than before.

Probably the biggest restriction you will find as a bankrupt person is that you are not allowed to be a Director of a Pty Ltd company. If you do own a company, you would either need to step down as a director of the company and the Trustee in Bankruptcy will need to make an assessment as to whether the shares you hold in the company can be sold. There is no restriction from you to operate as a sole trader or in a partnership though, so your options would be to start again with a new ABN or become an employee of a company. You should also note that if you are in a partnership at the time you go bankrupt, it will be dissolved, but a new partnership could be set up after that.

Whilst operating as a sole trader or in a partnership during bankruptcy, you are required to disclose the fact that you are bankrupt to the people that you are doing business with. You can do this by either disclosing it directly, or by using your full name as your business name.

Can I travel overseas whilst I am bankrupt?

One of the major concerns for people who are considering bankruptcy is that they will lose their passport and not be able to travel overseas. It is true that when you are bankrupt you have to give your passport to your Trustee, but it is still possible for you to go overseas.

Your Trustee in Bankruptcy must request that your passport to be handed in and hold onto it for the period of your bankruptcy. If you require the use of it you are able to apply with them to have it returned for the required period. Your Trustee will need a completed request form and details of your proposed trip, for example, the reasons for it, your itinerary, the cost of the trip and details of how it is being funded. What they essentially need to know is that you will be coming back from overseas, and that you have not used any undisclosed funds to pay for the trip. If it seems reasonable that you could have saved the money during the period of your bankruptcy, or if someone else is paying for it, then this factor should be covered.

Requesting the use of your passport does not guarantee that permission will be granted, as the decision is at the discretion of your Trustee. If you have not complied with their requests for information, or have not been paying any compulsory income contributions that you are liable for, the Trustee can use this fact to deny your request. If you do leave the country without permission and you refuse to return when requested in writing by your Trustee, then your bankruptcy period can be extended from three years, to eight years.

Many people that we speak to are concerned about their ability to travel overseas whilst bankrupt as their work requires it, or they have family overseas. If you are considering bankruptcy and have concerns, call us on 1800 462 767 for advice. We have a Registered Trustee in Bankruptcy on site and will be able to give you the most accurate and up-to-date information on how bankruptcy might affect you.

Can my bankruptcy be cancelled or annulled?

Yes there are ways to annul your bankruptcy. Your Bankruptcy Trustee will issue a certificate of annulment when:

  • all your debts and costs of administration of your bankruptcy have been paid in full, or
  • you make an offer to your creditors which is accepted. Typically you will need to offer your creditors more than they would receive if your bankruptcy continued in the ordinary course. Typically this is achieved by a lump sum payment made your family member or close friend. The proposal is put before a formal meeting of creditors and must be accepted by the majority of creditors; or
  • if you believe that you should never have been declared bankrupt, you can make an application to the Court to have your bankruptcy annulled under Section 153B. You will need to satisfy the Court that the bankruptcy order should not have been made in the first place.

Do I have to make payments from my income to the Trustee?

When you are a bankrupt person you no longer have to make payments toward your provable debts. Provable debts generally take the form of unsecured debts such as credit cards and personal loans, but can also include any actual or contingent shortfalls from secured debts such as home mortgages and car loans. But bankruptcy was not designed to get you out of paying your debts, rather, it is a way to ensure that any available money you do have is fairly distributed amongst your creditors. Some people, then, may find themselves having to make payments from their income to their Bankruptcy Trustee.

Bankruptcy generally lasts for three years, and every year of your bankruptcy your Trustee will do an assessment on your income. It is also your responsibility to inform your Trustee if there is a change in your income. If you earn over the threshold amount, which is indexed every six months or so, you will be required to contribute a portion of your income into your bankrupt estate. Put very simply, the more you earn beyond the threshold, the more you are required to contribute, although there are some factors that affect your contribution obligation. Having people financially dependent on you is one such factor – the more dependants you have, the less your required contribution. Child support is another factor, and again, the more you pay, the less your bankruptcy contributions. Note, though, that if you have part custody for a child that you also pay child support for, you cannot claim both factors.

For some people, calculating their compulsory income contributions can be quite complicated, but the Trustee in Bankruptcy is fully equipped to do so. We have however developed an on-line contribution calculator and we encourage you to use it to give you a guide as to whether you will become liable for compulsory contributions.

Other sources of funds for your bankrupt estate include equity in assets that you own, shares and other investments, and any winnings or substantial payments you might receive during the term of your bankruptcy. Disposing of any assets in an attempt to keep them from your creditors, and failing to properly disclose your income, are offences under the Act.

For more information on compulsory income contributions call the Australian Bankruptcy Service today on 1800 462 767.

Our trained consultants can give you confidential and obligation-free advice on all matters pertaining to Bankruptcy.

Do I need to become bankrupt?

Bankruptcy is obviously something that should be avoided if possible, but for some people it can be a necessary, and even beneficial choice. If you are struggling to make repayments toward your debts, are being hounded by creditors for payments, and have more financial obligations than money to service them – you may need to declare bankruptcy.

Bankruptcy is designed to mediate the impact of someone being unable to pay their debts. It is a legislated process by which any available funds or assets of the debtor (ie. yourself) are fairly distributed to creditors, whilst also providing the bankrupt person with protection from recovery action. It generally lasts for three years, although the effect on your credit file lasts for seven. There is also a permanent record kept on a government register, called the National Personal Insolvency Index.

To decide whether or not you need to become bankrupt, you should take an objective and logical look at your financial situation. The first step is to determine whether or not you are insolvent, as this is a requirement to declare bankruptcy. Sit down and work out your income and expenditure using your pay cycle as a time frame. Do you have more to pay out than you have money coming in? If the answer is yes, you are insolvent.

Now consider your own personal experience – are you able to cope with the demands for payment? Is your situation likely to improve in the near future? If your answers to these are “no”, then you need to take action now.

Do you stand to lose your employment or substantial assets if you were to declare yourself bankrupt? If so, you may want to consider entering into a Debt Agreement or a Personal Insolvency Agreement, which are arrangements that are governed by the Bankruptcy Act, but do not come with as many restrictions and repercussions as bankruptcy.

If, however, your situation does not allow you to consider one of these other options, you probably would need to consider declaring yourself bankrupt. But before you make the decision, call the Australian Bankruptcy Service today on 1800 462 767. We can take you through each step of the process, determining the severity of your situation, the impact bankruptcy would have on you, and whether or not you have any other options. Call us today for confidential and obligation-free advice. We are available 24 hours a day, 7 days a week.

How do I apply for bankruptcy?

Most people assume that bankruptcy is something that is forced on you by your creditors, but it is also a choice that you can make for yourself. Applying for bankruptcy yourself can be a daunting process, but with professional help it is actually relatively simple.

The first step is to know who your Bankruptcy Trustee is going to be, and for this you have two choices. There is the Official Trustee, which is actually a government body known as AFSA, or you can appoint a private Registered Trustee to act for you. To find your own Registered Trustee you would need to do a search and then choose someone that you feel comfortable with.

After your Trustee has been decided on, your bankruptcy application needs to be completed. This consists of a Debtor’s Petition (a form that states your desire to declare bankruptcy), a Statement of Affairs (a rather large form that sets out your current financial affairs) and required supporting documentation. If AFSA are your chosen Trustee, the application will be lodged directly with them – for a private Trustee, you will give them the application so that they can add their own Consent to Act to it.

Probably the hardest part of the process is getting the right advice and assistance, as there are many companies out there offering bankruptcy services, but their qualifications and capabilities are not always the same. When choosing a company to deal with, we recommend that you ask them the following:

  • Do you have a Registered Trustee in Bankruptcy on staff?
  • What exact services are you able to provide?
  • What are your qualifications?
  • Are you qualified to administer my bankruptcy directly?

Bankruptcy is a highly regulated process, and so some companies might not be able to provide you with a complete bankruptcy service. Some may be able to give you advice or help you fill out the paperwork, but will then pass your file over to another company for further work, or lodge your application with AFSA without you realising that they’ll be your Trustee. For the best possible service, choose a company that is run by accountants and has a Registered Trustee on staff who can administer your bankruptcy if you so choose.

We also suggest that you make a few calls and compare prices before deciding who to enlist for help. Be sure to find out exactly what service is being offered, and whether or not you will be dealing with the one company from start to finish. To give you an example, our company is run by a Registered Trustee who is able to administer your bankruptcy for you, and we can offer the following services:

  • Private bankruptcy administration starting at $80 per week (on a voluntary basis) (exclusive of any contributions you may be required to make under bankruptcy law)
  • We can complete your bankruptcy application and lodge it with AFSA for $400
  • General bankruptcy advice – free!

So if you feel you might have to apply for bankruptcy, call us today on 1800 462 767. Our advice is both free and obligation-free, and our focus is on ensuring that you are equipped to make an informed decision that serves your best interests – not ours.

How long will I be bankrupt and can this time period be extended?

There is often some confusion around how long bankruptcy lasts, which comes from stories about people not being able to get credit and having their time periods extended. The time that you are a bankrupt person is only three years, but the effect on your credit file will last for seven years. If you were to fail to comply with the requests of your Bankruptcy Trustee, or commit an offence under the Act, the Trustee could object to your being automatically discharged after three years and your bankruptcy period could be extended.

How long will my credit be affected if I go bankrupt?

Under the Bankruptcy Act it is an offence to gain credit over the amount of without disclosing the fact that you are a bankrupt person. This includes good and services, not just credit cards and loans. If you do gain credit over that amount without disclosing that you are bankrupt, your Trustee in Bankruptcy can object to your being discharged after three years, and your term could be extended to five years.

How much does going bankrupt cost?

Many people are confused about the costs associated with going bankrupt. Here at the Australian Bankruptcy Service we have had people tell us that they cannot afford to go bankrupt, but on the other hand, express surprise when there is a cost involved. In actual fact, you have two choices when it comes to declaring bankruptcy, and based on that choice you will either pay a fee, or nothing at all for your bankruptcy administration.

It is important to note first that when we talk about the cost of your bankruptcy administration, we are referring to fees for the service. This is separate to any payments from your income you may be bound to contribute to your bankrupt estate, which will depend on how much you earn, and would be applicable regardless of how you chose to have your bankruptcy administered. If you have any assets of value when you go bankrupt they would need to be investigated by your Trustee and possibly sold, and again, this would happen regardless of who your Trustee is.

This matter of who your Trustee is determines the cost of your bankruptcy administration. In Australia you have two choices when declaring bankruptcy: you can appoint the “Official Trustee”, which is a government body known as Australian Financial Security Authority (AFSA), or you can appoint a private Registered Trustee of your choosing. If you decide to have AFSA act as your Trustee, providing you do not have to contribute any of your income or assets as mentioned above, you will not have to pay anything toward your bankruptcy.

If you would rather have a private Registered Trustee that you have chosen, you will need to pay for their service. A Registered Trustee is usually either a fully qualified Chartered Accountant or Certified Practicing Accountant, and has to go through a rigorous acceptance process to be registered with AFSA. Registered Trustees are individuals who are working for, or running, a business, and as such they need to be remunerated. The cost of appointing a Registered Trustee will vary from place to place – as an example, our price starts at $80 per week (on a voluntary basis), which is one of the lowest prices you will find. People generally choose a private Trustee over the Official Trustee when they feel that they would be better off with a more personal service. Remember, the Official Trustee is not a person – it is a government body.

Some businesses also offer the service for filling out your bankruptcy application for you, which is lodged with AFSA, who then become your Trustee. When choosing this service, it is important to find out who your Trustee will be – sometimes the impression can be given that it is the company you are dealing with who will act for you. We have heard of people who have paid thousands of dollars just to have their paperwork filled out and the Official Trustee appointed to them, which is too much. You could actually complete the paperwork yourself! But if you do want the assistance of a professional to ensure it is done properly, we can help you for a one-off fee of $800.

If you are looking for an indication as to what bankruptcy will cost you, call our bankruptcy team today on 1800 462 767 for obligation-free advice.


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What are my responsibilities and obligations as a Bankrupt?

When you declare Bankruptcy you are appointed, or you may even appoint yourself, a Registered Trustee to manage the Bankruptcy process. It is the Trustee’s role to ensure that your Bankruptcy is carried out in accordance with the Act and that creditors receive any funds that they may be entitled to out of your estate. As a Bankrupt person it is your role to assist your Trustee with this process, by furnishing them with any information and records that they require.

The first thing that you will have to do as a Bankrupt is to complete and lodge a form known as a Statement of Affairs. This form is exactly as it sounds: a statement that sets out your financial affairs as at the time that you complete it. In completing your Statement of Affairs, you will be giving your Trustee information regarding your income, secured and unsecured liabilities, current and previous assets, and various other details that are required so that they can complete their investigations. Note that it is a punishable offence to knowingly provide false information in a Statement of Affairs.

You will be required to provide your Trustee with documentary evidence of certain aspects of your financial affairs, for example pay slips; bank statements; or books and records. You must also surrender your passport to your Trustee, although you can ask them for permission to use it if the need arises.

Aside from these obligations, your remaining ones are simply to comply with any instructions that your Trustee gives you. If they require any additional information or documentation, you need to provide it. You must keep them updated of your address and any material change in your circumstances. On rare occasions, when a case is a little more complicated than usual, a Bankrupt person may be asked to attend a meeting of creditors. Full compliance with your Trustee will help to ensure that there are no obligations to your discharge, which would mean an unnecessary extension of the term of your Bankruptcy.

For more information about the responsibilities and obligations of a Bankrupt, or any other aspect of Bankruptcy, feel free to search the rest of our website. Alternatively, you can the Australian Bankruptcy Service on 1800 462 767 and speak to a fully qualified bankruptcy expert with years of experience in giving Bankruptcy advice.

What are the benefits of bankruptcy?

There is such a social stigma around bankruptcy that many people do not realise that there are benefits to it. Bankruptcy was not designed to punish those who cannot pay their debts in full, but to ensure a fair outcome for all concerned whilst providing protection for the indebted person from harsh collection activity. Whilst there are undesirable aspects to the bankruptcy process, many people actually find that the good can outweigh the bad.

No one makes the choice to declare bankruptcy unless it is absolutely necessary. The decision usually comes when repeated demands for payment, both on the household budget and from creditors, become too much. When you become bankrupt you are released from payment of your provable debts, that is, your credit cards, personal loans and the like. If you have been suffering under unmanageable debt, the relief of being released from it can be immense. Those creditors are no longer able to demand payment from you, meaning that the stressful letters and phone calls will stop too.

Another major benefit of declaring bankruptcy is that it provides an end to your provable debts. Many people come to us for help after realising that if they were to continue on the way that they are, they will probably pay their debts in full in about 20-30 years – that’s as long as a mortgage, but with no benefit! Declaring bankruptcy wipes your slate clean, and allows you to become financially rehabilitated and to learn to live without credit.

Many people who call us soon realise that the benefits of bankruptcy are, for them, far greater than the inconvenience of its negative consequences. For those for whom bankruptcy will involve substantial hardship, such as through the loss of a home, we often recommend looking into a legally binding settlement arrangement such as a Debt Agreement or a Personal Insolvency Agreement instead. If you are struggling with debt and have been considering bankruptcy, call the Australian Bankruptcy Service today on 1800 462 767 – you may find that we can help you to avoid it, or that it won’t be as bad for you as you first thought.

What are the consequences of bankruptcy?

Another negative consequence of bankruptcy is that if you cannot pay your debts, but you have assets that could be put toward those debts, they will be sold by your Bankruptcy Trustee. Certain things are protected, such as your personal effects, household goods and a vehicle worth up to $9,100. But if you have a property, shares, a vehicle worth more than $9,100 or any other assets of value, they will need to be surrendered. In the event that your vehicle is sold, the protected amount of $9,100 will be returned to you so that you can buy a cheaper vehicle.

What is a Bankruptcy Notice?

A Bankruptcy Notice is a very serious legal document, and is the first step that a creditor takes in order to make you bankrupt. If you receive a bankruptcy notice you need to act quickly, because you have limited options and not a lot of time to do it in.

A creditor can have you issued with a bankruptcy notice if you owe them more than $10,000 and they have already had a court judgement for it made against you. The laws surrounding bankruptcy notices are fairly strict, so if you do get one, you can be fairly certain that it has been done legitimately and correctly. You will be required to respond to the notice, either by paying out the debt, or applying to the Court to have the time period extended or the notice set aside – but it would only be set aside if it was wrongfully issued or contained material errors.

You have 21 days to respond to a bankruptcy notice. If you do not respond within 21 days of it being served on you, you will be considered to have committed an “act of bankruptcy”. The creditor can then use this to have you issued with a Creditor’s Petition.  Once a Creditor’s Petition has been issued you will become bankrupt unless you appoint a Controlling Trustee or Propose a Debt Agreement.

If you have been issued with a bankruptcy notice, the one thing that you simply cannot do is ignore it in the hope that it will go ok – it will not! You are extremely close to being made bankrupt and you need to act quickly and decisively. You cannot act without advice though, so you should call the Australian Bankruptcy Service. Here at the ABS we have a dedicated team of consultants with years of experience giving advice about bankruptcy, and our CEO is a Registered Trustee in Bankruptcy. We can help you to ascertain what your options are and what your next step should be. Call us on 1800 1800 462 767 at the very first sign that you are at risk of facing bankruptcy.

What is Voluntary Bankruptcy?

Here in Australia, there are two ways that a person can become bankrupt:

  1. You can voluntarily make yourself bankrupt; or
  2. One of your creditors can make you bankrupt

Declaring yourself Bankrupt voluntarily is done by way of a form called a Debtor’s Petition. You must complete this form, as well as a form known as a Statement of Affairs, and have it lodged with the Australian Financial Security Authority (“AFSA”). AFSA will then process and accept your voluntary Bankruptcy application.

AFSA can reject your Bankruptcy application if:

* You are not a permanent resident of Australia with a current Australian address;

* You are not insolvent, ie. they believe that you have the capacity to repay your debt within a reasonable amount of time; or

* Your Bankruptcy application is incomplete.

You will also need a Trustee to administer your Bankruptcy and again, you have two options:

  1. You can appoint yourself a private Registered Trustee who will charge you a fee for their services; or
  2. You can allow AFSA to act as your Trustee, which will either be free or incur a minimum fee of approximately $4,000.

Note that any fee to administer your Bankruptcy may be separate to any compulsory income contributions and/or sale of assets required by your Bankruptcy.

If you feel confident that you can complete the required Bankruptcy paperwork on your own, the forms can be downloaded from the AFSA website. Alternatively, to ensure that it is done properly and that there will be no delay in processing your application, The Australian Bankruptcy Service can assist with the completion of your paperwork and lodge it on your behalf from only $800. We also have a Registered Trustee on site who can act as your private Bankruptcy Trustee. Call the Australian Bankruptcy Service today on 1800 462 767 for more information on voluntary Bankruptcy and how we might be able to assist you.

What sort of debts can I include in a bankruptcy?

When you declare bankruptcy it is essential that you disclose all of your debts, no matter what sort they are. The Bankruptcy Act will then determine which of those debts you will actually be released from – they are known as “provable debts”.

Provable debts are those that you are liable for, or could possibly (contingently) become liable for, as at the date that you become bankrupt. The most straight-forward provable debts are unsecured debts such as credit cards, store cards and personal loans. “Unsecured” means that there is nothing that the bank has a claim on that could be sold if you did not make all of the payments.

This distinction is important, because the act of declaring bankruptcy does not stop a secured creditor from being able to realise their security, ie. to sell it in the event of non-payment. A debt can only be provable when it does not involve the value of a secured asset. If a secured creditor wanted to make a claim in your bankruptcy they would need to:

  • sell the secured asset and claim for any shortfall from that sale; or
  • claim the estimated shortfall, ie. the difference between the value of the asset and the amount of the debt; or
  • release the secured asset entirely and claim the full amount of the debt.

There are some other sorts of debts that are non-provable, meaning that you have to pay them. These include Child Support, HECS and FEE-HELP and certain types of fines. To clarify which of your debts would be provable in bankruptcy, you can call the Australian Bankruptcy Service today on 1800 462 767. We have years of experience in bankruptcy advice and administration, and a Registered Trustee in Bankruptcy on site who can ensure that the information you are given is 100% accurate.

Will bankruptcy affect my employment?

Everyone needs to work, and bankruptcy does not stop you from doing so. For some people though, bankruptcy can have an effect on their employment, which means that they may have to make some changes in order to keep an income coming in.

The main way in which your employment will be affected if you go bankrupt is if you are running a business in the form of a company or sole trader/partnership. You cannot be a director of a company if you are bankrupt, which would mean that you would have to dissolve the company, or have someone else appointed as a director and you continue on as an employee. If you are operating as a sole trader or in a partnership, you might have to change the way that you run your business. There will be an effect on your ability to gain credit, and any existing partnership would need to be dissolved and a new one set up. For more information on running a business as a bankrupt person, see this article

Another way in which your employment could be affected is if you need a certain type of licence to work, such as for gaming or security. In order to determine if your particular licence will be affected, you need to contact the relevant licensing authority. Generally speaking, they will assess the situation on a case by case basis and decide whether or not you can keep your licence for the period of your bankruptcy.

Finally, there are certain positions with certain organisations that could have a “no bankruptcy” clause in their employment contract. If you are an accountant or a lawyer, or maybe work for a bank, you might be particularly vulnerable. You should consult your employment contract and make a call to your HR department if you are concerned that you might lose your job if you are declared bankrupt.

If you think that you are facing bankruptcy and are worried that it will affect your employment, you should call us at the Australian Bankruptcy Service straight away. Sometimes there are alternatives to bankruptcy that will not affect your particular type of employment as seriously. We can assess your situation and inform you of your options, and ensure that you are fully informed about whatever is likely to occur. Call us today on 1800 462 767 for obligation-free advice.

Will bankruptcy affect my spouse?

As if the idea of bankruptcy wasn’t stressful enough already, many people are also in the position of having to worry if it is going to affect their spouse. Officially, bankruptcy should have nothing to do with your spouse – but there are some indirect ways in which they could be affected.

Bankruptcies can only be administered individually, which means that each person must declare themselves, or be declared, bankrupt. It also means that a spouse cannot be declared bankrupt purely because you have been. If you become bankrupt it involves your debts, your credit file, your income and your assets. Problems may arise, though, when any debts are in joint names or any assets are jointly owned.

If you are jointly liable for a debt with someone, you will be released from that liability. The other party, however, will not. They will remain liable for the full amount of the debt, for banks do not halve debts when one person is no longer able to pay it. In most cases, so long as your spouse continues to make the full payments, the debt should continue on as it has been. In very extreme circumstances, the bank might demand full and immediate payment of the debt.

Will bankruptcy release me from unpaid debts?

The aim of the bankruptcy process is to give you relief from unmanageable debts and to make the process fair for your various creditors. When you are declared bankrupt you will be released from most, if not all of your unpaid debts. There are some debts that you may need to pay in full though.

The debts that you will be released from are called “provable debts“. These include your unsecured debts such as credit cards, store cards and personal loans. If you have a secured debt that is unpaid, you will only be released from that if you surrender the asset that is attached to it. If you want to keep the asset you will have to continue paying the debt.

There are some other types of debt that you may have that you will not be released from. These include things such as child support and fines. HECS and FEE-HELP debts also need to be paid via the usual channel, which is by paying extra tax if you earn over a certain amount in the financial year.

Bankruptcy automatically releases you from your obligation to make payments toward your provable debts, and your creditors cannot demand any more money from you after bankruptcy. However, if you have a tax debt it will be treated a little differently. If you owe money to the Australian Taxation Office for tax that was paid before you went bankrupt, they cannot demand that you pay it, but they also won’t write the debt off straight away. If you are owed a tax refund at any time during your bankruptcy, they will hold onto that and put it towards the debt. It is only after you have been discharged from bankruptcy, which is usually after three years, that they will cease applying your tax refunds to your debt.

You should also note that any debts that you incur after you are declared bankrupt, you must pay for them (tax debts included).

For more information on being released from your unpaid debts, call us at the Australian Bankruptcy Service on 1800 462 767. Our consultants are highly trained and experienced, and are standing by to give you confidential and obligation-free advice.

Will I be able to start afresh after bankruptcy?

The goal of bankruptcy is to ease one’s burden of unmanageable debt and to allow one to become financially rehabilitated. Whilst it may seem unpleasant to some at the time, the end result is that you will be able to start afresh.

Bankruptcy frees you from your obligations to pay your provable debts. Generally speaking, your provable debts will be your unsecured debts such as credit cards, store cards and personal loans. If you have secured debts and you stop paying them, those creditors will still be able to sell the asset (such as a home or vehicle) that is attached to the debt. If you still owe any money on that debt after the asset is sold, though, you will not have to pay that leftover amount. For more information on the debts that are included in bankruptcy, see this article. The financial relief that comes with bankruptcy is immediate, with your creditors being unable to contact you with demands for payment.

Bankruptcy will place a default on your credit file for a period of seven years, after which time it is completely removed. There is a permanent record kept on the National Personal Insolvency Index, but this is rarely accessed during a credit check as searching it incurs a fee. This default will keep you from gaining more credit during the period of your bankruptcy, which is usually three years. After your bankruptcy is over you will still have the default for the remainder of the seven years and it will be up to the creditor you apply with to decide if you are granted credit. During your bankruptcy, though, you will have learned to live without credit and to cover your costs with the funds you have available. In this way, you can ensure that you do not fall into the trap of unmanageable credit all over again.

For many people, bankruptcy can provide the clean slate they need to be able to free themselves of unmanageable debt and learn to live without credit. They are then in a position to be able to start afresh, with no debts hanging over their head and no dependency on credit facilities. If you think that bankruptcy might be the best choice for you, call us at the Australian Bankruptcy Service on 1800 462 767. We can give you advice on how bankruptcy is likely to affect you and if you have any other options you could consider first.




Will I ever get a mortgage again after bankruptcy?

One of the biggest fears that people have about bankruptcy is that they will lose their home – second to this is the fear that they will be unable to own their own home in the future. This fear is unnecessary, for there is nothing to stop you from getting a mortgage after you have come out of bankruptcy, although you may have to wait until your credit file is clear, is all.

Being declared bankrupt will place a default on your credit file that lasts for seven years. Bankruptcy itself generally lasts for three years, so you should have a four year period there where you are not bankrupt but will still have a mark on your credit file. This does not necessarily stop you from being granted a mortgage, as secured debts such as these are sometimes easier to get approved for. The banks know that if you do not pay the debt, they will be able to sell the house and get their money back that way. But if you do get approved while you have a mark on your file, you might find that you are given a slightly higher interest rate, or are required to have a larger deposit.

For most people who have come out of bankruptcy it is simply easier to wait until the default is gone from their credit file. After the default is gone there will still be a permanent record of the bankruptcy held on the National Personal Insolvency Index, but this index requires one to pay a fee to access it, so it is generally not used by the banks for credit-checking purposes. Waiting that little bit longer can work in your favour because:

a)    you will have a better chance of being accepted on your first go; and

b)    you will have more time to save a larger deposit.

Quite often, bankruptcy is not nearly as bad as people fear, and this is true in respect of getting a mortgage in the future. Any record of the bankruptcy on your credit file is cleared after seven years, so as long as the rest of your application is in order, there should be no reason why you would not be approved. If you are still concerned about bankruptcy and the effect it will have on your future, call the Australian Bankruptcy Service today on 1800 462 767 for free and confidential advice.

Will I lose my car if I go bankrupt?

The current protected amount for a vehicle is $9,100 (as at March 2024). What this means is that if your vehicle is worth less than $9,100 you will simply be allowed to keep it. If it is worth more than that, your Trustee in Bankruptcy would sell the vehicle and return the protected amount of $9,100 to you so that you can buy a cheaper one. Any excess funds would then be put toward your bankrupt estate.

But what if your vehicle is still under finance? The “protected amount” actually refers to available equity in the vehicle, which means that for the Trustee to sell it, there would need to be a positive difference between the vehicle value and the loan of more than $9,100 – they would need to get more than the protected amount after paying out the secured vehicle loan with the sale proceeds. So if your vehicle was worth $20,000 and you still had $10,000 owing, the Trustee would sell it, give you $9,100 and put $900 ($10,000 – $9,100) towards your bankruptcy. But if it was worth $20,000 and you owed $15,000, the trustee wouldn’t likely sell it. It is actually quite rare to owe less than what the vehicle is worth as cars do not go up in value, so in many cases, if your vehicle is still under finance, you will be able to keep it.

In the event that the vehicle is registered in more than one name, any available equity will be divided by the number of owners. If your portion of the equity is greater than the protected amount it will be sold – you will receive your $9,100, and all other owners will be paid out their full share. If you own more than one vehicle, you will be allowed to keep one only.

Will I lose my house if I go bankrupt?

Bankruptcy is a process that is designed to act as a sort of mediator between someone who is unable to pay their debts and their creditors. It releases you from your obligation to pay your debts, but if you have any assets or substantial income that can be put towards them, you will be required to contribute those to your bankrupt estate. Bankruptcy doesn’t always mean one will lose their house.

Sometimes an arrangement can be made with the Bankruptcy Trustee whereby the bankrupt person’s share of any available equity can be purchased by a spouse or family member. The claim on the property is then transferred to the purchaser, effectively keeping it from the Trustee and, in turn, the bankrupt person’s creditors. This is not always an easy thing to achieve, though, because the purchaser will also have to pay stamp duty on the purchase of the equity.

In some instances, a person may be declared bankrupt and have no available equity in their property. A simple, general rule of bankruptcy is that if it is not worth selling something (ie. no money will be gained from it), it may not be sold. If you are made bankrupt and it is not worth selling your property right away, your Trustee may not have no reason to do so. However, the period of your bankruptcy will be a minimum of three years, so if the property increases in value during that time and equity becomes available, it will most likely be sold then. It is also possible, in some cases, for the Trustee to maintain their interest in the property for up to nine years.

If you are facing bankruptcy and you have an interest in a property, you should call us right away on 1800 462 767 for advice. We can help you to try and save your house even if you go bankrupt. Call us now for professional and confidential advice 7 days a week on our toll free bankrupcty advice line 1800 462 767.

Will I lose my superannuation in bankruptcy?

The thought of losing your superannuation can be terrifying, as one day it is going to be all that you have to live on. So naturally it is a big concern for people who are considering bankruptcy. The good news is that your superannuation is protected under bankruptcy and will not be touched. The only reason it would be is if you are found to have funnelled assets into your super fund because you know you are going to go bankrupt.

When you are declared bankrupt there are certain assets that you are bound to lose, such as property, shares and certain other things of value. Some assets, though, are “protected” – superannuation is one of these, along with household goods and personal effects, and a vehicle worth up to a certain amount. You would not be able to access your super to pay out unsecured debts and prevent bankruptcy, so in the same respect, it is not something that is touched when you do go bankrupt.

There is a section of the Bankruptcy Act, however, that prevents you from transferring or disposing of assets to “defeat” your creditors. To try to defeat your creditors is to know that you are in financial difficulty and then to plan to keep your assets from being sold so that your creditors can receive the funds. If your Trustee in Bankruptcy can see that you have transferred amounts of money into your superannuation fund prior to going bankrupt, they would need to investigate the matter, and if they determine that you have done so in order to keep the money from your creditors, those transactions can be reversed. You may also be subject to penalties under the Bankruptcy Act.

If you think that you will soon be made bankrupt, either by your own doing or against your will, it is essential that you do not move around any of your assets, be they physical or monetary. Seek professional advice straight away and ensure that you are not about to commit an offence under the Act. Our consultants at the Australian Bankruptcy Service are highly trained to deal with all aspects of bankruptcy. We also have a Registered Trustee in Bankruptcy on site who will be able to answer any complicated questions with accuracy. Call us on 1800 462 767 and get the right advice, right now.




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