Where can I find additional help and support for bankruptcy? 

AFSA recommends that you contact a financial counsellor for assistance if you are in need of additional support. Services such as the National Debt Helpline offer free, qualified, confidential and impartial professional support, which may assist you in managing your life after bankruptcy.  

To speak with a financial counsellor free of charge, contact the National Debt Helpline (open 9:30am to 4:30pm Monday to Friday) on 1800 007 007. Additional tools and resources are also available online on the National Debt Helpline website. Surviving bankruptcies in Australia requires you to be open and transparent with your information when dealing with financial support services.  

Is it possible to move on after bankruptcy? 

Absolutely, there is no reason why you can’t still realise your fullest potential after being discharged from bankruptcy. However, you should make every effort to ensure that you do not repeat the same mistakes that led to that bankruptcy in the first place. Remember, bankruptcy severly impacts the livelihoods of creditors that aren’t paid. 

While there are no further restrictions on applying for credit after discharge, you need to ensure that any repayments for loans after bankruptcy are well within your means to service. Stick to a well-designed budget, ideally one formed with the assistance of a qualified financial advisor, and you’ll still achieve life goals, such as buying a house. With the right financial framework, you’ll give yourself every opportunity to make a fresh start.  

What does it mean to declare bankruptcy? 

Declaring bankruptcy means that the individual is applying to be released from all applicable debt obligations, seeking a fresh start. Alternatively, there are instances where a creditor (someone owed money to) can apply through the courts to have the borrower declared bankrupt. Within Australia, the bankruptcy process is commenced formally in one of two ways. Either: 

1. Voluntary Bankruptcy – The individual lodges a Bankruptcy Form directly to AFSA.  They have assessed themselves, ideally with the guidance of a financial counsellor to be unable to service outstanding debts. The information that they will need to submit to the appointed trustee includes:

• Income. 
• Assets. 
• Debts. 

• Businesses and trusts that they are part of. 
• Any court cases that they are involved in. 

2. Sequestration Order – A creditor applies through the courts to have a borrower declared bankrupt. This application is made by way of a ‘creditor’s petition’, and must satisfy the following three conditions in order to be successful, according to AFSA: 

• 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 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.)  

What happens when you claim bankruptcy and how long does bankruptcy affect me? 

• Your credit file will show the bankruptcy for a minimum of five years from the date of commencement. While most bankruptcy cases reach discharge at three years and one day, the process can be extended to a maximum of eight years by the trustee, if they lodge a formal objection. Wondering, how long does it take to improve your credit score in Australia? Well, the longer it takes to reach discharge, the longer that detrimental information stays on your credit file.  
• A trustee will be appointed to oversee the bankruptcy process. This will either be the Official Trustee (AFSA), or a registered trustee from the list found here. The trustee determines the plan of action for the bankruptcy, determining how assets will be used to repay creditors. The trustee will need to be informed if any information changes, such as a change in jobs, a higher or lower income, or you stop working.  
• Some, though potentially not all, debts will be wiped when the bankruptcy process ends. So, does bankruptcy clear all debts? No, not all debts are able to be cleared. Unsecured debts, such as credit cards, phone plans or merchant fees, without any property or collateral to underwrite them, are the ones usually cleared by the bankruptcy process. There are certain debts that you will still be liable for, including court imposed fines and child support: 

• If you earn over a certain amount, you may be required by your trustee to make compulsory AFSA indexed payments from your income to compensate creditors.   
• You must seek written consent from your trustee in order to travel overseas. It is considered an offence within Australia for a bankrupt individual to travel internationally without obtaining such consent first.  
• Your declared assets, such as your house may be sold by the trustee. You may still be able to retain certain household goods, cars above a certain value and tools required for your employment.  
• Your name will permanently appear on the National Personal Insolvency Index (NPII). This public record ensures that no individual can hide their bankruptcy if the information is sought. 

Protect against insolvent businesses with CreditorWatch 

Just as bankrupt borrowers can put pressure on the revenue flow of loaning institutions when partner businesses become insolvent this can be equally devastating for your cash flow and financial stability. As a business owner, you need to be able to monitor trading partners to detect the earliest possible warning signs of insolvency.  

A comprehensive and cost-effective range of tools and resources allowing Australian businesses to mitigate their exposure to insolvent business is available from CreditorWatch. Onboard and manage clients effortlessly with the DebtorLogic platform, clean up all your data with a Portfolio Health Check, access the RiskScore for all trading partners to assess creditworthiness, and analyse high-value clients more comprehensively with a Financial Risk Assessment.  

Speak to our expert team today to protect yourself against bad debt and risky trading partners.