Lexi Webster
If you are considering applying for bankruptcy in Australia, it is important to understand the process and consequences. Bankruptcy is a formal way to manage your debt, and there are several other options to consider before applying, such as a debt agreement or personal insolvency agreement. There is no minimum or maximum debt or income requirement to be eligible for bankruptcy, and there is no application fee. To apply, you must complete a Bankruptcy Form online or via post, and it is recommended that you seek advice from a financial counsellor or legal service beforehand.
| Characteristics | Values |
|---|---|
| Application Process | Complete a Bankruptcy Form online or offline. |
| Application Time | Takes 30 to 60 minutes to complete the form. |
| Application Fee | None |
| Eligibility Criteria | No minimum or maximum debt or income requirement. |
| Required Documents | Statement of Affairs, Trustee Consent to Act Declaration form (if applicable). |
| Consequences | Serious and cannot be cancelled. Bankruptcy will appear on the credit report for a minimum of five years. |
| Debt Management Options | Declaration of intention, Debt agreement, Personal insolvency agreement. |
| Trustee | Can be chosen by the applicant or assigned by AFSA. |
| Support | Financial counsellors are available for free. |
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What You'll Learn
Eligibility and consequences
There is no minimum or maximum amount of debt or income to be eligible for bankruptcy in Australia. However, it is important to understand what declaring bankruptcy means for you now and in the future. Bankruptcy is a formal option to manage your debt, and there are other options available to you, such as a declaration of intention, debt agreement, or personal insolvency agreement.
If you are unsure about declaring bankruptcy, you can seek advice from a financial counsellor or a private bankruptcy lawyer. Bankruptcy will appear on your credit report for a minimum of five years, and on a public record known as the National Personal Insolvency Index. You will need to continue to pay your child support, Centrelink and Higher Education debts, and any court fines. There may be restrictions on holding some statutory positions during this period, and some professional bodies or trade associations have conditions of membership during your bankruptcy.
If you decide to declare bankruptcy, you will need to complete a Bankruptcy Form online. You can apply for bankruptcy by creating an Online Services account with the Australian Financial Security Authority (AFSA). You will need to create a Digital Identity or an AFSA account to prove your identity. Once you have created your account and proved your identity, you can complete and submit the Bankruptcy Form. You will need to include all your debts and notify your trustee straight away if you forget to include any.
If your application for bankruptcy is accepted, a confirmation letter will be sent to you and your creditors. If it is not accepted, you will be notified in writing with the reasons why. Your bankruptcy normally ends three years and one day from when the Official Receiver accepts your Statement of Affairs.
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Completing the Bankruptcy Form
To apply for bankruptcy in Australia, you need to complete a Bankruptcy Form online. This process may take around 30 to 60 minutes. You can create an Online Services account on the Australian Financial Security Authority (AFSA) website. You will then need to create a Digital Identity or an AFSA account to prove your identity.
Once you have created your account and proven your identity, you can complete and submit the Bankruptcy Form. If you cannot complete the form online, you can submit it offline by contacting the AFSA to request a copy of the form, which you can then return via post. If you are completing the form on behalf of someone else, you must submit it offline.
It is important to include all your debts on the form when applying for bankruptcy. You must also include details of your income and assets. If you forget to include any debts, you must notify your trustee immediately. If you have been made bankrupt by a court order (sequestration order), do not use the online form. Instead, contact the AFSA to request a copy of the Statement of Affairs form, which you can also obtain from your trustee.
If you wish to choose your own registered trustee to manage your bankruptcy, you must ask them to complete a Trustee Consent to Act Declaration form, which must be submitted at the same time as your Bankruptcy Form. A registered trustee can help you complete a paper form and send it to the AFSA via email. If you need help with your form, you can talk to a financial counsellor, registered trustee, or other service provider. Financial counsellors are available nationwide and provide an independent, free, and confidential service.
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Debt declaration and alternatives
Before declaring bankruptcy, it is important to understand the process and the consequences involved, as well as to seek advice on your options. Bankruptcy is a formal option to manage your debt, but it is not the only one. The Bankruptcy Act 1966 provides three other alternatives:
- Declaration of Intention: This provides 21 days of protection during which unsecured creditors cannot take action against you. This allows you time to consider your options and seek financial advice.
- Debt Agreement: A legally binding agreement between you and your creditors, where they agree to accept an affordable amount over a set period. This option is generally available to those with small debts, few assets, and low incomes.
- Personal Insolvency Agreement (PIA): A binding agreement between you and your creditors where part or all of your debts are paid off in instalments. The advantage of a PIA is that it allows you to continue your business, and there is no requirement to contribute post-PIA income or property to your estate.
If you decide to proceed with bankruptcy, you can apply online by creating an Online Services account and completing the Bankruptcy Form. This process includes creating a Digital Identity or an AFSA account to prove your identity. You can also apply through the post. If your application is accepted, you will receive a confirmation letter with your bankruptcy number.
It is important to note that bankruptcy has serious consequences and cannot be cancelled if you change your mind. You must also include all your debts and comply with certain obligations, such as providing details of your debts, income, and assets to your trustee.
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Trustee selection
If you choose to declare bankruptcy, the Australian Financial Security Authority (AFSA) will appoint an Official Trustee or a registered trustee to manage your assets and debts. You can nominate a registered trustee if you are applying for voluntary bankruptcy. To do this, you must ask them to complete a Trustee Consent to Act Declaration form, which must be submitted at the same time as your Bankruptcy Form. A registered trustee can help you complete a paper Bankruptcy Form and send it to the AFSA.
If you do not choose a registered trustee, the AFSA will select one for you. A registered trustee cannot submit a Bankruptcy Form online on your behalf. However, they can assist you in completing a paper Bankruptcy Form.
Once you have declared bankruptcy, you must provide your trustee with details of your debts, income, and assets. Your trustee will then notify your creditors, preventing them from contacting you about your debt. They can also sell certain assets to help pay off your debts. If your income exceeds a certain amount, your trustee may require you to make compulsory payments.
It is important to note that bankruptcy is a serious decision with significant consequences and it cannot be cancelled if you change your mind. Before declaring bankruptcy, it is recommended to seek advice from reputable sources, such as the AFSA or a financial counsellor.
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$14.99
Post-bankruptcy obligations
To apply for bankruptcy in Australia, you need to complete an online Bankruptcy Form, which can take 30 to 60 minutes. This route is not available if you have been made bankrupt by a court order (sequestration order). In such cases, you must contact the Australian Financial Security Authority (AFSA) to request a copy of the Statement of Affairs form.
Once your bankruptcy ends, you are no longer required to pay off most of your debts. However, there may be some debts that you still need to pay. Your name will continue to appear on the National Personal Insolvency Index (NPII), indicating that your bankruptcy has ended.
While there are no restrictions on applying for loans or credit, it takes time to rebuild your credit rating, and lenders may be hesitant to approve your applications. If you do borrow money or purchase items on credit, ensure that the repayments are within your budget.
Your trustee may continue to manage your bankruptcy even after it has ended. For instance, if your trustee has claimed your house as an asset, they may sell it to repay your creditors, even after your bankruptcy period ends. There is generally a six-year time limit for trustees to deal with property, although this may vary depending on individual circumstances.
To qualify for discharge, individuals must comply with their obligations during bankruptcy. This includes cooperating with the trustee, attending meetings, disclosing financial information, and making income contributions if required.
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Frequently asked questions
You can apply for bankruptcy in Australia by completing a Bankruptcy Form online. This process takes around 30 to 60 minutes.
You will need to include all your debts and provide details of your debts, income, and assets.
You will receive a confirmation letter from the Australian Financial Security Authority (AFSA) if your application is accepted. This letter will include your AFSA administration number, also known as your bankruptcy number. If your application is rejected, you will be notified in writing.
Yes, but you must first terminate your debt agreement before applying for bankruptcy.
Yes, the Bankruptcy Act 1966 provides three other options to address debt: Declaration of Intention, Debt Agreement, and Personal Insolvency Agreement.
