Important: The consequences of bankruptcy are serious and your bankruptcy cannot be cancelled if you change your mind.
When you become bankrupt:
- your assets may be sold
- your income, employment and business may be affected
- you may not be released from all debts
- your ability to travel overseas will be affected
- your name will appear on the National Personal Insolvency Index (NPII) forever
- your ability to obtain future credit will be affected
- your bankruptcy will be administered by a trustee
- your bankruptcy will normally last for 3 years and 1 day.
Your assets may be sold
You will be able to keep ordinary household goods, tools (up to the indexed amount) used to earn an income and vehicle(s) (with an aggregate value up to the indexed amount). Other assets – including your house – can be sold by your trustee.
- You cannot conceal, remove or dispose of any property inside or outside Australia. If you do, you may be subject to criminal prosecution.
Your income, employment and business may be affected
- If your income exceeds a certain limit you may be required to make contributions from your income.
- You cannot be a director of a company.
- You will be prohibited from managing a company unless you have the permission of a court.
- Some professional/licensing bodies may restrict or prevent you from continuing in that trade or profession.
- You may not be able to hold certain public positions.
- If you are in a business and trade under a business name different to your own, you must tell everyone you deal with that you are bankrupt. If you don’t, you may be subject to criminal prosecution.
You may not be released from all debts
- You are released from most of your unsecured debts (eg credit cards, personal loans, store cards) once you are discharged from your bankruptcy.
- Some types of debts are not covered by bankruptcy (eg penalties, fines and child support debts) – you will have to continue to pay these.
- If a debt that is covered by a bankruptcy is found to be incurred by fraud, then you will still owe the balance remaining upon discharge.
- If a debt is secured against an asset (eg a mortgage on a house or car) and you do not maintain repayments, that creditor can repossess and sell the asset – however any shortfall between the mortgage amount and the sale price will be covered by your bankruptcy.
Your ability to travel overseas will be affected
- You will not be able to travel overseas without the written permission of the trustee.
- You may be asked to surrender your passport to the trustee.
More information is available on our Overseas travel page.
Your name will appear on the National Personal Insolvency Index (NPII) forever
- The NPII is a searchable register.
- Credit reporting organisations will keep a record of your bankruptcy for up to 5 years, or longer in some circumstances, even if your bankruptcy has been discharged.
Your ability to obtain future credit will be affected
- You may find it hard to borrow money and buy things on credit.
- You may find it hard to rent, get electricity, water or the telephone connected without paying a bond.
- Some banks may not let you operate an account or may restrict how you can use your account.
- If you obtain credit above a certain amount you must tell the supplier that you are bankrupt.
Your bankruptcy will be administered by a trustee
- A bankruptcy can only be administered by a registered trustee or the Official Trustee (AFSA).
- If you are voluntarily becoming bankrupt via a debtor’s petition, you have the right to choose your trustee.
- If a creditor is commencing bankruptcy proceedings against you to make you bankrupt via sequestration order (involuntary bankruptcy), the creditor has the right to choose which trustee is appointed.
Your bankruptcy will normally last for 3 years and 1 day
- This period commences from the date your statement of affairs is lodged and accepted.
- If an objection is lodged by your trustee, this period may be extended to up to 8 years.