BANKRUPTCY

• You can see the light at the end of the tunnel - bankruptcy is for 3 years (or in exceptional cases 5 or 8 years).
• You no longer have to deal with your creditors – all communications are through your bankruptcy trustee.
• You can retain all your household furniture and effects.*
• You are allowed to retain a motor vehicle(s) and tools of trade up to certain limits.
• Your superannuation fund is protected.*
• Creditors cannot commence or continue any legal action to recover their debts.
• You can continue to trade as a sole trader under an ABN.*
• After you are discharged from bankruptcy, you are released from your debts incurred before the date of bankruptcy.*

             *  Exclusions may apply

• Your assets, including your home, may be sold.
• You may have to make compulsory income payments for the duration of bankruptcy if your net income is over a prescribed amount.
• There may be restrictions on leaving Australia during bankruptcy.
• You are automatically disqualified from managing any corporations or becoming a director, alternative director or company secretary without permission from the Court.
• There may be a negative impact on your professional qualifications – seek advice from your professional body.
• The fact that you have been declared bankrupt will be noted on your credit file and will remain for 5 years from the date on which you became bankrupt or 2 years from when your bankruptcy ends, whichever is later.

e.g. mortgage or hire purchase agreement

If you wish to retain an asset which is subject to a secured debt e.g. a house or motor vehicle, you will be required to meet your ongoing liabilities to that creditor, if not, the creditor can take action to repossess the asset.

Bankruptcy will not release you from all debts including:

• Child support and maintenance 
• Court imposed penalties and fines
• HECS and HELP debts