During Bankruptcy

  1. How will my credit rating be affected?
  2. How long would I be bankrupt?
  3. How will this affect my ability to travel?
  4. Can a creditor still contact me insisting on payment once I have become bankrupt?
  5. What do I do if I am still receiving phone calls from a debt collection agency after I have declared bankruptcy?
  6. Will my bankruptcy be advertised?
  7. What happens if someone has guaranteed some of my debts?
  8. Can I have a bank/cheque account?
  9. Can I continue to use my credit card after bankruptcy?
  10. Can I get a loan during my bankruptcy?
  11. What about debts incurred during bankruptcy?
  12. What happens to any debt I forget about when applying for bankruptcy?
  13. Are there offences under bankruptcy?
  14. What happens if my utilities providers are listed as creditors?
  15. What if I get a tax refund?

How will my credit rating be affected?

Credit rating companies are allowed to keep record of your bankruptcy or debt agreements for 5-7 years from the start date of your bankruptcy. Both bankruptcy and debt agreements will damage your credit rating the same way and it will stay damaged even if you pay all your debts and are discharged early.

After the 5-7 year period, your credit file should not show the bankruptcy or debt agreement and you can apply for credit again.

How long would I be bankrupt?

The period of a bankruptcy is 3 years and 1 day. This period may be extended to 5 years by an objection entered by the trustee. The following lists describe how some of those objections can come to pass.

Objections will extend bankruptcy to 5-8 years from the date of filing a Statement of Affairs if a bankruptee:

  • continues to manage a corporation;
  • makes a void transfer against the trustee - due to Sections 120, 121 & 122 of the Bankruptcy Act 1966;
  • engages in misleading conduct and exceeds the current amount limits;
  • after the date of bankruptcy, deliberately provided false or misleading information to the trustee;
  • intentionally fails to disclose to the trustee, a beneficial interest in a property.
  • does not pay contributions as assessed;
  • does not adequately explain how money was spent or assets were disposed of;
  • does not disclose any beneficial interest in any property;
  • does not disclose to the trustee a liability that existed at the date of bankruptcy;
  • does not advise the trustee of any material change to the information disclosed on their Statement of Affairs;
  • does not attend a creditor's meeting without written approval from the trustee;
  • does not notify a change of address or daytime telephone number;
  • does not provide details of property and income when requested;
  • does not attent an interview or examination.

When Travelling

Bankruptcy will be extended to 5 years from the date of returning to Australia if a bankruptee leaves Australia and does not return, and may be extended to 8 if the bankruptee does not return when requested.

How will this affect my ability to travel?

There are no restrictions on domestic travel in Australia. If you are travelling overseas, as long as you follow the correct procedure and apply to your trustee for permission to travel overseas at least 2 weeks prior to your departure date, your application should be accepted. Only in certain (and rare) cases is permission to travel refused.

Please note: it is an offence to travel overseas without consent in writing while bankrupt.

In rare cases where you are required to pay contributions on your bankruptcy, you may have to apply to the courts for permission to travel.

Can a creditor still contact me insisting on payment once I have become bankrupt?

No. Once you are bankrupt, The Bankruptcy Act prevents creditors from attempting to recover money from you. However if you have a creditor that has security over a property, they are still able to recover the property from you if you are not able to meet your repayments. If other creditors persist with their attempts to recover money from you, you should inform them of your bankruptcy. If they continue to harass you, you should notify your trustee immediately. If there is physical harassment or intimidation, you should contact the police.

What do I do if I am still receiving phone calls from a debt collection agency after I have declared bankruptcy?

A creditor does have the right to sell your debt to another debt agency. Creditors tend to on sell their debts in bulk and they do not always disclose to the purchasing agency which debts are covered by an existing bankruptcy or another arrangement under the Bankruptcy Act. As a result, you may receive a letter of demand or telephone call requiring payment from the agency that has purchased the debt. If this happens, you can inform them that your are now bankrupt and give them your Bankruptcy ID number. Tell them to contact the original creditor that sold them your debt and they can also contact your trustee if need be.

Will my bankruptcy be advertised?

Generally, no. Many people think that when you become bankrupt it will be published in the local paper for everyone to see. This use to be what happened about 20 years ago. The truth is that bankruptcy today is a very confidential matter and likely the only people who will know, are those you choose to tell, and your creditors. For more information, visit the "Who will know I'm bankrupt?" article on the Australian Government's website.

Your name will, however, be placed on the NPII (National Personal Insolvency Index) for the rest of your life. The NPII is a publicly available and permanent electronic record of all personal insolvency proceedings in Australia. Any member of the public can look it up provided they pay the fee per search.

When you fill out your application online with us, we will indicate what information will be publicly available on the NPII.

What happens if someone has guaranteed some of my debts?

The creditor is entitled to recover payment from the guarantor. Once payment has been made, the guarantor then becomes a creditor and is able to lodge a claim in your bankruptcy for the debt that they had to pay.

Can I have a bank/cheque account?

You may be worried your bank will freeze your account as soon as it becomes aware of the bankruptcy, but that rarely happens.

You can normally keep your bank accounts as long as the financial institution is in agreement. Bank accounts with over $1,000.00 may be seized by your trustee.

Can I continue to use my credit card after bankruptcy?

It is up to the bank's discretion if they wish to continue extending credit to you. All creditors at the start of your bankruptcy will need to be listed on your Statement of Affairs - they will be informed of your bankruptcy. It is an offence for you to incur credit over $5,703.00 without informing the person you are dealing with that you are currently an undischarged bankruptee.

Can I get a loan during my bankruptcy?

You can apply for credit up to $5,703.00 during your bankruptcy term (3 years) without having to disclose to the borrower that you are bankrupt. Above this amount you have to inform them you are currently an undischarged bankruptee and your chances of being approved are slim.

What about debts incurred during bankruptcy?

You are responsible and liable for any debts that you incur after your bankruptcy begins.

What happens to any debt I forget about when applying for bankruptcy?

Sometimes people miss things and forget about a debt, remembering it later on. Contact your trustee immediately so that it may be added to your list of creditors. Failure to disclose debts could extend your bankruptcy term to 5 years.

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 will not be able to pay;
  • Failure to disclose assets;
  • Gambling and speculation which results in bankruptcy;
  • Incurring debts during bankruptcy over $5,703.00 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.

What happens if my utilities providers are listed as creditors?

If you have accounts with service providers - such as electricity, gas, telephone or internet - the service provider may require payment of the account and possibly a bond for the service to be continued. When setting up a new account they are also likely to ask for a bond to be payed.

What if I get a tax refund?

If the tax office is listed as a creditor on your bankruptcy, during the term of your bankruptcy (3 years) any tax refund you would normally receive may be kept by the tax office to go towards the amount owed.

Tax refunds relating to income that you earned prior to the start of your bankruptcy (regardless of when it is received by you) is considered an asset of your bankrupt estate and may be claimed by your trustee. Tax refunds relating to income earned during your bankruptcy will be treated as income for income assessment purposes.

After the discharge date of your bankruptcy, any debt still owed to the tax office which was part of the bankruptcy cannot be claimed by the tax office. Tax refunds after discharge date may be kept by you. You are still responsible for lodging your income tax returns during the term of your bankruptcy.

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.