Before Bankruptcy

  1. If I go bankrupt, does that make me a loser?
  2. Can my application be rejected?
  3. I'm already in a debt agreement - can I still file for Bankruptcy?
  4. Will I have to appear in court?
  5. Will people come to my house to see what I have and take everything?
  6. Another person has signed a loan agreement with me, will they have to pay the debt if I declare myself bankrupt?
  7. Is there a minimum amount I need to owe before I can go bankrupt?
  8. Are there offences under bankruptcy?
  9. How do I become bankrupt?
  10. When are the creditors notified of my bankruptcy?
  11. Will they say I can afford my debts?
  12. Can I appoint my own trustee?
  13. How quickly must I submit my application after signing it?
  14. What if my application is rejected? Will I be listed on the NPII?
  15. What are the different types of debt?
  16. What debts are not covered by bankruptcy?
  17. What about debts incurred just before bankruptcy?

Seriously consider the impact upon income, assets, employment and inheritances before you go Bankrupt.

If I go bankrupt, does that make me a loser?

The bankruptcy laws were created for a simple reason, good people can hit bad times and need help. If you think that makes you a loser - then you are wrong and you don’t have to feel that way. You aren't a loser and you aren’t alone. Personal bankruptcies and insolvencies are at a record high in Australia, affecting three times as many Australians compared to twenty years ago.

If you are suffering serious depression because of your financial situation please contact BeyondBlue or call them on 1300 224 636.

Bankruptcy may give you the fresh start you need so you can get your life back on track.

Can my application be rejected?

Your application can be rejected if:

  • Your forms are incomplete or inaccurate;
  • You do not provide sufficient proof of identity;
  • You are not personally present in Australia or do not ordinarily live in Australia;
  • You have previously been bankrupt 3 or more times, or once in the last 5 years;
  • You are unwilling to pay one or more creditors, or creditors in general;
  • The Official Receiver is of the view that you can pay all your debts within a reasonable time.

I'm already in a debt agreement - can I still file for Bankruptcy?

You can still file for Bankruptcy, but your current debt agreement must be cancelled with your Debt Administrator before you are able to do so.

Will I have to appear in court?

People who voluntarily go bankrupt and don't provide false information are extremely unlikely to have to appear in court.

Will people come to my house to see what I have and take everything?

This is highly unlikely. Your trustee is generally only interested in property and vehicles (of value) which they don’t need to personally view. Under your bankruptcy you are allowed to keep most ordinary personal and household items e.g furniture & appliances of a reasonable value as well as life insurance and superannuation policies. These things are considered protected property.

A bankruptee may keep tools used to earn an income valued up to $3,700.00. This value is not what you purchased them for but the value if you were to sell them at, say, a garage sale.

View the "What can be taken or sold in bankruptcy?" article on the Australian Government's website for detailed information of what assets may be affected.

Another person has signed a loan agreement with me, will they have to pay the debt if I declare myself bankrupt?

In most cases, yes. They will continue to have a liability for the total amount outstanding on all debts held in joint names.

Is there a minimum amount I need to owe before I can go bankrupt?

Yes. You must owe at least $5,000.00 to voluntarily apply for bankruptcy. A creditor cannot force you into bankruptcy unless the debt is over $5,000.00.

Are there offences under bankruptcy?

Yes. The most important are listed below:

  • Disposing of property before bankruptcy with intent to defeat your creditors;
  • The deliberate obtaining of credit when you know you cannot pay;
  • Failure to disclose assets;
  • Gambling and speculation which results in bankruptcy;
  • Incurring debts during bankruptcy for over a set limit without disclosing that you are bankrupt;
  • Leaving Australia without the trustee’s permission;
  • Operating a business under an assumed name, without advising your bankruptcy.

The penalties for these offences vary from 6 months to 3 years imprisonment upon conviction. If you are worried about having committed an offence - seek legal advice before going bankrupt.

How do I become bankrupt?

You can become bankrupt voluntarily at any time if you owe more than $5,000.00, or you can become bankrupt on the actions of a creditor. If you have considered the alternatives and have decided that voluntary bankruptcy is your best option, you will need to complete a Debtor’s Petition and Statement of Affairs. This is where BankruptMeNow comes in. Our platform will help you quickly and efficiently complete the required documentation.

You will need the name, address, and amount owed to each of your creditors. You must show all debts for which you are personally liable. There are severe penalties including imprisonment for failure to disclose property, concealment or unlawful disposal of property or any item of value. You will need full details of your income as well as personal property which can include such things as house, car, bank accounts, shares, and any money owed to you.

If the forms are accepted by the Official Receiver in Bankruptcy, you become bankrupt.

When are the creditors notified of my bankruptcy?

Once the paperwork has been accepted by the Official Receiver in Bankruptcy and you have become bankrupt, your creditors are notified in writing as soon as possible by your trustee. They are informed of the assets and liabilities disclosed by you on your statement of affairs.

Will they say I can afford my debts?

You can voluntarily declare bankruptcy as long as you owe more than $5,000.00.

If you have considered your different options & wish to proceed with your bankruptcy application - it is ultimately your choice.

Can I appoint my own trustee?

As a debtor, you have the option of choosing a private registered trustee to administer your estate. Creditors can appoint a different trustee at a later date. To appoint a trustee to your application, a properly completed Form 12 - Trustee consent to act declaration (Official ASFA Document) must accompany the debtor's petition and statement of affairs. If no Form 12 is submitted, the Official Trustee is automatically appointed as the trustee of the estate.

How quickly must I submit my application after signing it?

The Official Receiver will not accept documents dated more than 28 days prior to receiving them. Documents dated older than 28 days do not adequately reflect the debtor's affairs and as such, the application must be rejected.

Once paid for, our system generates your application within 60 seconds and, once signed & dated, you are able to potentially submit your application the same day. Choosing to have your application posted will ensure you receive your documents with plenty of time to spare for submission to the Official Receiver.

What if my application is rejected? Will I be listed on the NPII?

If you apply for bankruptcy and are rejected, you will not be listed on the NPII (National Personal Insolvency Index).

What are the different types of debt?

Unsecured Debts

A debt is unsecured if it is not secured by any asset (eg. your credit card, some personal loans). An unsecured creditor generally does not have the right to repossess the item you purchased with the credit extended by them. Once you are bankrupt - they usually can not take any further action against you to recover the debt. If this is of concern to you, seek clarity from a legal advisor!

Secured Debts

A debt is secured if it is secured by an asset that permits the creditor to repossess the asset if you fall behind in your repayments (e.g house mortgage, vehicle loans, lease agreements).

They are permitted to take and sell the asset and can lodge a claim against your bankruptcy to cover any shortfall. If you wish to continue to use the asset you will need to inform the creditor and continue making regular payments. If the value of the asset is more than the amount needed to finalise the agreement, during your bankruptcy, your trustee may sell the asset to pay out all the creditors.

What debts are not covered by bankruptcy?

Some of the debts that Bankruptcy does not cover you for (you will remain liable to pay):

  • Fines for breaches of the law (e.g speeding fines);
  • Debts arising from fraud;
  • Child support and maintenance payments;
  • Debts owed to centrelink;
  • HECS debts.

What about debts incurred just before bankruptcy?

If you incur credit when you know you are already insolvent (cannot pay your debts) - it is an offence under the Bankruptcy Act.

Note: These F.A.Q's are for information only and should not be relied on as legal or financial advice. Your personal circumstances are not considered in any of the content above.