Bankruptcy

Bankruptcy is a legal process that releases you from your debts.

If you’re unable to pay your debts and you cannot come to suitable payment arrangements with your creditors, you might apply to become bankrupt.

Applying for bankruptcy can have serious long-term consequences, and it is important to get advice from a qualified financial counsellor or bankruptcy lawyer. They will explore whether you have any other options and explain the consequences of bankruptcy.

To apply for bankruptcy yourself, you must lodge a form with the Australian Financial Security Authority (AFSA) at afsa.gov.au.

Learn more about:

• The effects of bankruptcy
• What happens if I become bankrupt?

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The effects of bankruptcy

Bankruptcy generally lasts for three years.

During this time, you are an “undischarged bankrupt”, and there are obligations on you and restrictions on what you can do. For example, you must notify your trustee of any change in your income or assets; you cannot travel overseas without your trustee’s written permission; and you cannot be a company director. (See afsa.gov.au/insolvency for details.)

After the bankruptcy is discharged, these restrictions no longer apply. However, there are some significant lasting consequences:

• a permanent record of your bankruptcy is listed on the National Personal Insolvency Index (an electronic public register)
• your bankruptcy will remain on your credit report for up to five years, or longer in some This may affect your ability to borrow money.

What happens if I become bankrupt?

Below are the steps involved in becoming bankrupt: