How long do bankruptcies last in Australia (2022 Update)

If you are experiencing financial issues, filing for bankruptcy can help you get peace from your creditors and restore control of your life. Bankruptcy procedures are a significant concern and shouldn’t be treated lightly. Yet, they are overseen by a well-established rules system that ensures the procedure cannot be prolonged without fulfilling specific requirements. Filing for bankruptcy enables you to continue living your life without dealing with the stress or inconveniences of bankruptcy indefinitely.

How long do bankruptcies last in Australia?

 According to the Bankruptcy Act of 1966, the bankruptcy process in Australia typically lasts for three years and one day. The window for voluntary bankruptcy opens one day after your petition is submitted to the Australian Financial Security Authority (AFSA). If you were declared bankrupt by order of the court, the bankruptcy period starts the day after AFSA accepted your statement of affairs. The bankrupt person is “discharged” after the bankruptcy ends.

The three-year-and-one-day timeframe usually applies, irrespective of whether you declare bankruptcy voluntarily or due to a court order. If you and your creditors come to a Part IX  Debt Agreement or Part X Personal Insolvency Agreement, the bankruptcy process can be over earlier than expected. If the trustee still has to complete investigations or realise and distribute additional assets, the administration of a bankrupt estate may continue after discharge.

 Extended Bankruptcy Periods

If the debtor goes bankrupt due to a Sequestration Order imposed by the Court on the request of one or more creditors, they may well not submit the bankruptcy form for weeks, months, or even years. As a result, even though they were declared bankrupt when the court issued the sequestration order, they won’t be discharged from their financial obligations until the conclusion of the three years that begin with the bankruptcy of their bankruptcy form. They will continue bankrupt if they fail to file their bankruptcy form.

If the bankrupt engages in “bad behaviour” as defined by the Bankruptcy Act before or during their bankruptcy, the trustee of the bankrupt’s estate may object to the bankrupt’s discharge. This will increase the three-year period to five or eight years, depending on the type and intensity of the bad behaviour.

If you fail to do the following, your trustee may submit an objection to discharge, and your bankruptcy may be extended.

• Provide the trustee with the information they have requested.
• Declare all sources of income and revenue.
• Make the necessary payments.
• Declare all assets and liabilities.

 

Annulling Your Bankruptcy

 Financial stability and payment to creditors are the two main goals of bankruptcy. A period of bankruptcy isn’t predetermined. The bankruptcy may be cancelled if this occurs beforehand, such as if you suddenly come into a large sum of money and can pay off all of your debts. There may also be other situations when an annulment, such as a debt agreement or another legally binding credit repair plan, may be granted.

Conclusion

The “point of no return” that many believe bankruptcy to be is not valid. It will only last a while and might help you become more financially capable. Keep in mind that the duration of your bankruptcy will be public knowledge. Your name will permanently appear on the National Personal Insolvency Index (NPII), which is a publicly searchable register that lists all insolvency proceedings in Australia.

It is always best to seek professional advice to determine how long bankruptcy lasts. Contact us at Australian Bankruptcy Services if you’re looking for a trusted bankruptcy trustee. Call our free bankruptcy hotline at 1800 462 767.