If you’re unable to pay your debts and cannot come to suitable payment arrangements with your creditors, you might apply to become bankrupt.
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Bankruptcy is a legal process that releases you from most debts, relieves you from the stress of dealing with debt collectors and lets you start over.
Applying for bankruptcy can have serious long-term consequences and may affect your ability to borrow money in the future. 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 what it means to be bankrupt.
For more information and to apply for bankruptcy, visit the Australian Financial Security Authority (AFSA) or call 1300 364 785.
What happens if I become bankrupt?
Bankruptcy generally lasts for three years. When you become bankrupt a trustee is appointed to control most of your financial affairs. The trustee informs creditors of your bankruptcy and they will have to deal with your trustee instead of you to have their debts repaid.
To pay your creditors, the trustee will:
- sell your assets, which may include your home (you will be able to keep some household goods and personal items)
- take some of your income once you are earning over a certain amount
- investigate your financial affairs
- recover property or money that you have transferred to someone else for less than market value.
Podcast: Coping with a Cancer Diagnosis
Rania Tannous, Head of Legal, Corporate, Legal and Governance, AMP; Patricia Troll, Senior Legal Counsel, AMP Financial Services Legal, Legal and Governance, AMP; Lynette Brailey, Program Coordinator, Financial Assistance Service, Cancer Council NSW; Stephen Bray, Financial Planner, FM Financial, TAS; Angela Daly, Senior Social Worker, Cancer Services, The Adem Crosby Centre, Sunshine Coast Hospital and Health Service, QLD; Sandra Hodge, Consumer; Sandi Johnson, Consumer; Antony Mitchell, Financial Counsellor, Financial Counselling Program, Cancer Council VIC; Lucy Pollerd, Social Worker, Peter MacCallum Cancer Centre, VIC; Heather Richards, Consumer; Deb Roffe, 13 11 20 Consultant, Cancer Council SA.
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