Bankruptcy

Information about issues relating to being declared bankrupt

Bankruptcy is when an individual is declared 'legally insolvent'. This means that they owe more than the value of their assets and are therefore unable to pay what is owing to their creditors. You should only consider applying for bankruptcy if it is the only option available to settle your debts.

Things to consider

Your ability to obtain credit will be reduced.
You will not be able to manage a corporation.
You will need to get written permission to travel overseas.
You have to pay fees for the administration of your bankruptcy.
Unless you are a low income earner, you have to make compulsory contributions from your income to the trustee to repay creditors.
Bankruptcy does not cover debts for fines, maintenance/child support payments, HECS or Student Supplement Loans.

The benefit of filing for bankruptcy is that it releases you from most of the debts you owe and therefore creditors and debt collectors will stop hassling you for money. The downside is that you may lose your valuable assets such as your home and car and you will suffer punitive measures such as a negative listing on your credit file.

Considering the far-reaching consequences of bankruptcy, it is very important that you obtain independent financial counselling and/or legal advice before you apply. Ask about alternatives.

Contact the Insolvency Trustee Service Australia (ITSA) for additional information. ITSA is the Commonwealth Government agency that regulates bankruptcy.