There is a misconception that when people declare Bankruptcy, they are released from all their debts.

This is not the case.

While Bankruptcy does help to cover most debts, there are some that still need to be repaid.

So what debts are covered by Bankruptcy and what debts are not?

Unsecured debts

Bankruptcy covers most unsecured debts and releases them once the Bankruptcy period is over. These are debts that are not protected by a guarantor or backed by an asset.

These are:

Gas, electricity, phone and Internet bills
Media, legal and accounting fees
Credit cards
Unsecured personal loans
Payday loans
Unpaid rent

Some unsecured debts that are not covered by Bankruptcy include:

Child support and maintenance
Court fines
HECS & HELP debts
Debts incurred after the Bankruptcy period has begun

Secured Debts

However, secured debts are usually not covered by Bankruptcy. This is when a debt is tied to an asset such as a house or vehicle. This means that the creditor can take possession of the asset and sell it if you fail to meet your payments.

Typical types of secured debts include:

Mortgage
Car loan

It is best to speak to a professional Bankruptcy consultant who can specifically assess your situation and so you will know exactly what debts will be covered by Bankruptcy and what debts will not be. Australian Bankruptcy Services runs a toll-free 24/7 hotline so that there will always be someone available to speak to you. Please call us on 1800 462 767.