What does Bankruptcy mean?
Bankruptcy is a legal process where you're declared unable to pay your debts. It can release you from most debts, provide relief, and a fresh start. You can enter into voluntary bankruptcy by completing and submitting a Bankruptcy Form. It's also possible for someone you owe money to (a creditor) to make you bankrupt through a court process, which we refer to as a sequestration order.
Bankruptcy normally lasts 3 years and 1 day. However, bankruptcy is just one formal option available under the Bankruptcy Act to manage your debt. Other formal options include temporary debt protection for 21 days reprieve from creditors enforcing a judgment against you, a debt agreement, or a personal insolvency agreement.
When you are bankrupt:
You must provide details of your debts, income, and assets to your trustee.
Your trustee notifies your creditors that you’re bankrupt. This prevents most creditors from contacting you about your debt.
Your trustee can sell certain assets to help pay your debts.
You may need to make compulsory payments if your income exceeds a set amount.
Bankruptcy may have a serious impact on you, affecting your ability to get credit, travel overseas, or gain some types of employment. The National Personal Insolvency Index is a searchable public register listing insolvency proceedings in Australia.
You can apply for bankruptcy if you meet these two requirements:
You're unable to pay your debts when they are due (insolvent).
You're present in Australia or have a residential or business connection to Australia.