“If you are unable to pay your debts and cannot come to suitable repayment arrangements with your creditors, you may voluntarily lodge a petition to become bankrupt (called a debtor’s petition) or a creditor may take action to have you declared bankrupt by order of the Court (called a sequestration order).
Bankruptcy is a legal process that releases a person from almost all of their debts.
You can apply to become bankrupt voluntarily if you have a debt of any amount that you cannot pay. When you are a voluntary bankrupt, a trustee appointed by the Australian Financial Security Authority (AFSA) will manage your financial affairs. A fee may be charged where you have assets or earn above your income threshold amount (see information on current thresholds).
AFSA will advise you of when you are officially bankrupt. They will nominate a trustee to manage your financial affairs within two weeks of when you lodge your application with them. Bankruptcy lasts for three years from the day it is declared.
Creditors who have tried unsuccessfully to recover debts you owe that together total at least $5,000 can force you into bankruptcy. In this situation, a private trustee will manage your financial affairs and charge very high fees for this service.
You can appoint a private trustee. (Ask us how).
The effects of bankruptcy
When you become bankrupt:
Assets that are safe*
Assets you will probably lose
What employment restrictions apply to bankrupts?
Director of a company
You cannot be a director of a company or be involved in its management without the permission of the Court during the term of your bankruptcy.
Other employment restrictions
Professional bodies and/or trade associations have certain conditions of membership for the duration of a bankruptcy. There may be restrictions on holding some statutory positions during this period. Consumers should contact the relevant peak body of their trade or profession to see if there are any restrictions during and/or after bankruptcy.