AFSA (Australian Financial Security Authority) Bankruptcy Credit Risk CreditorWatch Finance
5 mins read

How Long Does Bankruptcy Stay on Your Credit File in Australia? 

How long does bankruptcy stay on your credit report?

If you are unable to meet your debts or liabilities when they are due, you may have to file for personal bankruptcy. Banks, lenders and trading partners all need to be kept informed of this information if enquired, as it can affect their perception of your creditworthiness and suitability for loans. As such, bankruptcy information remains on your personal credit file for five years or longer.  

What does bankrupt mean?

Bankruptcy in Australia is a legal process, including a declaration stating that an individual is considered unable to pay their outstanding debts and needs a ‘clean slate’. The process of bankruptcy is managed by the Australian Financial Security Authority (AFSA). By contrast, if a company cannot pay its debts it is instead referred to as insolvency and managed by the Australian Securities and Investments Commission. So, how long does bankruptcy last, and how long does bankruptcy stay on your file in Australia? 

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How long does bankruptcy stay on your credit file?

Bankruptcy stays on your credit file for five or more years. The bankruptcy process usually lasts for three years and one day from commencement, and the relevant information is kept on your credit file for a further two years after the individual is discharged.  

This means that, at a minimum, the bankruptcy will be recorded on your credit file for five years. Should the process be extended, and the individual remains undischarged, this information will therefore remain on file for longer. 

What are the consequences of bankruptcy in Australia?

The bankruptcy will appear on your credit file for upwards of five years. Other loaning institutions, including banks and lenders, will account for this information in their assessment of your creditworthiness as a borrower. If you are applying for a loan above a set amount, you are required by law to inform the prospective creditor. Following your bankruptcy declaration, you may find it more difficult to secure further lines of credit, and it can significantly reduce your overall credit score.  

A trustee will be appointed to manage the bankruptcy. This can either be a registered trustee (a list of which can be found here), or the Official Trustee (AFSA). They will determine details such as payments that may need to be deducted from income to compensate creditors, if you earn over a set amount. They will need to be informed if you change jobs, receive a higher or lower income, or stop working.  

Some, though potentially not all, debts will be wiped when the bankruptcy process ends. So, does bankruptcy clear all debt? No, not exactly. Unsecured debts, without the property or collateral to underwrite them, are the ones usually cleared by the bankruptcy process. According to AFSA, examples of unsecured debts include: 

  • Credit and store cards 
  • Unsecured personal loans and payday loans 
  • Gas, electricity, phone and internet bills 
  • Overdrawn bank accounts and unpaid rent 
  • Medical, legal and accounting fees 

There are certain debts that you will still be liable for, including: 

  • Court imposed penalties and fines 
  • Child support & maintenance 
  • HECS & HELP debts (government student loans) Note: If you have a VET-FEE HELP or VET Student Loans debt that you disagree with, please see the information at VET Student Loans Ombudsman 
  • Debts you incur after your bankruptcy begins 
  • Unliquidated debts (e.g. a debt where you and your creditor are yet to determine the amount). 

If you earn over a certain amount, you may be required by your trustee to make compulsory payments. These AFSA indexed amounts, also known as contributions, will be used by the trustee to pay off debts and compensate creditors.   

You must seek written consent from the trustee to travel overseas. It is considered an offence within Australia for a bankrupt individual to travel internationally without obtaining such consent first.  

Your assets may be sold by the trustee. These can include items such as your house and certain property, all of which you must declare when the bankruptcy process is commenced. You may be able to retain certain household goods, cars above a certain value and tools required for employment.  

Your name will permanently appear on the National Personal Insolvency Index (NPII). This searchable public bankruptcy register ensures that this personal insolvency information remains accessible if required.  


How can bankruptcy be filed?

There are two avenues for filing for bankruptcy in Australia:  

Voluntary bankruptcy – Submitted by the individual themselves by way of a Bankruptcy Form to AFSA. You will need to give various details including: 

  • Your income 
  • Your assets (things you own) 
  • Your debts (money you owe) 
  • Any businesses, companies and trusts that you’re part of 
  • Any court cases that you’re involved in. 

Sequestration order – Where a creditor (someone owed money) successfully applies through the courts in the form of a creditor’s petition to have an individual declared bankrupt. According to AFSA there are three conditions that must be satisfied by the creditor in order to petition: 

  • The creditor must be owed an amount of $10,000 or more (or, where the petition is being presented by two or more creditors, the total amount owed to these creditors must be $10,000 or more) 
  • the amount(s) owed is a liquidated sum (i.e. the amount payable is ascertainable and not dependent on the outcomes of other events) and is payable immediately or at a certain future time 
  • an “act of bankruptcy” (one of several events defined in section 40 of the Bankruptcy Act that could indicate that the debtor is unable to pay their debts) has been committed by the debtor within the six-month period before the presentation of the creditor’s petition.  (Most creditors’ petitions are based on non-compliance with a bankruptcy notice.  More information about bankruptcy notices is available in Applying for a bankruptcy notice.) 
Can you improve your credit score after bankruptcy?

Yes, you can improve your credit score after bankruptcy. Any positive payment behaviour, including the timely payment of any and all bills moving forward, may serve to help improve your credit score over time. You can’t wipe the bankruptcy away, however with the help of Comprehensive Credit Reporting (CCR) standards, perhaps you can still indicate that you are a potentially trustworthy borrower. Once you are discharged from your bankruptcy there are no restrictions to applying for new credit, such as a personal loan, car loans, or credit cards, and you may still be able to secure approval.  

Where can I find legal and financial support?

If you are experiencing financial distress, it is recommended by AFSA that you contact a financial counsellor for assistance. They are free, qualified, confidential and impartial, and may be able to assist you in forming a plan to manage your debts.  

To speak with a financial counsellor, contact the National Debt Helpline (open 9:30am to 4:30pm Monday to Friday) on 1800 007 007, free of charge. You can also find additional tools and resources available online on the National Debt Helpline website. Alternatively, some state services such as Legal Aid QLD, Legal Aid NSW, Victoria Legal Aid and Legal Aid Western Australia are also available.  




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From the perspective of your business, the key is to avoid those that may approach insolvency well ahead of time with the suite of tools from CreditorWatch. Through leveraging our sophisticated platforms, you can protect your cash flow from risky debtors who may be unable to service their credit and ensure the survivability and sustainability of your business.  

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Speak to our expert team today to protect your business. 


bankruptcy credit management credit risk finance
Business Development Specialist | Credit management and Collections
Sarah is a highly experienced business risk, credit management, collections and business development specialist with over 10 years of experience. She is an expert in identifying and mitigating risks and has helped numerous businesses gain a deep understanding of the latest trends in credit management. Sarah’s recent work includes writing about high-risk businesses and how to identify them and providing insights on using a risk assessment tool like CreditorWatch’s RiskScore to make informed decisions. She also emphasises the importance of performing due diligence on new clients to assess their credit risk and mitigate cash flow risk. Additionally, Sarah has also written about cash control and how to improve debtor management. Sarah’s recent work includes writing about high-risk businesses and how to identify them and providing insights on using a risk assessment tool like CreditorWatch’s RiskScore to make informed decisions. She also emphasises the importance of performing due diligence on new clients to assess their credit risk and mitigate cash flow risk. Additionally, Sarah has written about cash control and how to improve debtor management.
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