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What is bankruptcy?

Bankruptcy is a legal process where a trustee is appointed to administer an insolvent person’s financial affairs and allow a fair distribution of the bankrupt’s assets to creditors. It provides relief and can help you make a new start by releasing you from most debts. It also protects creditors’ interests by having an independent accountant investigate the bankrupt’s affairs.

You can enter into voluntary bankruptcy, referred to as a 'debtor's petition'. It's also possible that a person you owe money to (a creditor) can make you bankrupt through a court process. This is called a 'creditor's petition'.

How long does bankruptcy last?

Bankruptcy normally lasts for three years and one day from the date of the filing of a Statement of Affairs. This is called 'discharge from bankruptcy'. You don't need to apply to be discharged from bankruptcy, it is an automatic process that the Australian Financial Security Authority handles. However, the administration may continue for some time afterwards. A trustee may also seek to extend the period of bankruptcy for a variety of reasons.

The consequences of declaring bankruptcy

When you declare bankruptcy or are made bankrupt:

  • You must provide details of all of your debts to your trustee in bankruptcy.
  • Your trustee will deal with your creditors on your behalf. This prevents them from contacting you directly about outstanding debts.
  • Your property or any assets you own may be sold to pay off your debts.
  • Restrictions may apply to your employment and whether you can run a business;
  • You may need to make compulsory payments to your trustee to be distributed to your creditors, if you are earning over a certain amount of money.
  • There may be restrictions or conditions placed on you if you wish to travel overseas.
  • You may find it hard to obtain credit.
  • Your name will permanently appear on the National Personal Insolvency Index.

Know your options

Bankruptcy is just one formal option available under the Bankruptcy Act that you can use to manage your debt. Aside from informal negotiations with creditors, there are also other options available under the Act, such as entering into a debt agreement (Part IX) or signing a personal insolvency agreement (Part X).

It's important to get advice from a lawyer on bankruptcy and insolvency as early as possible. That way, a plan to deal with your debts or debts owed to you can be developed and implemented before it’s too late.


We can act for you on a fee for service basis. Where appropriate, we will refer you to an affiliated accountant or an insolvency practitioner, who will work closely with you and your lawyer to determine the best approach for managing your circumstances.

Talk to our expert team today

We are experts in helping individuals through the bankruptcy process. Our friendly and understanding team can take you through everything one step at a time.

Contact us today to find out where you stand.

Nicole Jagger


Stephen Wilson


Jessica Bourke


Eleanor Scott


Jordyn Keating


El Leverington


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