Get help before you apply

If you don't think you'll be able to repay your debts you can apply for bankruptcy. Only do this if you have explored all other options, and seek legal advice or financial counselling before you go ahead.

What is bankruptcy?

Bankruptcy is a process where you are legally declared unable to meet your debts. When you apply for bankruptcy you will be released from most of the debts you owe and debt collectors will stop contacting you.

You need to consider carefully whether declaring bankruptcy is the right step for you. Being bankrupt can permanently affect whether you can get credit in the future.

Once you are declared bankrupt, you are classified as bankrupt for 3 years and a trustee is appointed to look after your affairs.

Your bankruptcy will be listed on your credit report for 2 years from the date your bankruptcy ends, or 5 years from the date you became bankrupt (whichever is later). It will also appear on a publicly-accessible register called the National Personal Insolvency Index (NPII).

You cannot be a director of a company without leave of the court and you may not be able to work in particular trades and professions. See AFSA's website for more information on employment restrictions.

Video: Consequences of bankruptcy

Video about consequences of bankruptcy

Effie Zahos from Money Magazine explains the consequences of declaring bankruptcy in this short video. For more information visit the AFSA website.

Your options

There are other ways to sort out your finances other than bankruptcy.

A financial counsellor can explain options like debt recovery procedures. Financial counselling is a free and confidential service. If you decide you do want to declare yourself bankrupt a financial counsellor can help you to understand the consequences.

Community legal centres and Legal Aid offices offer free legal advice on bankruptcy. Services are available in every state and territory.

How to apply for bankruptcy

See the Australian Financial Security Authority (AFSA) for information on how to declare personal bankruptcy.

If you're struggling with repaying your debts, it is important to get help straight away so you understand your options. Only consider declaring bankruptcy as a last resort.

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Last updated: 03 Apr 2018