Personal Bankruptcy Lawyers in Melbourne, Sydney & Brisbane

How long does bankruptcy last?

In Australia, bankruptcy generally lasts 3 years and 1 day from the date your application is accepted, or your statement of affairs is filed with the Australian Financial Security Authority (AFSA). 

However, a trustee can file an objection to extend this period to 5 or 8 years if you fail to comply with your obligations or fail to disclose your income or assets. Extension can also be granted, subject to changes in circumstances, to your trustee. To ensure your bankruptcy is discharged as soon as possible, it is important for you to cooperate fully throughout the process.

What assets can I keep if I go bankrupt?

You do not lose all assets in bankruptcy. Australian law protects certain categories of property, which include ordinary household goods and personal items, tools and equipment you need for your trade or profession (up to set limits), and vehicles (up to a prescribed threshold). Superannuation held in a complying fund is also generally protected. However, investments, real estate, and valuable personal assets usually vest in your trustee and it can be sold to repay the creditors.

What are alternatives to bankruptcy?

In Australia, several formal and legally binding alternatives to bankruptcy exist under the Bankruptcy Act 1966 (Cth). These may be more convenient considering your financial situation. A debt agreement under Part IX of the Bankruptcy Act enables the debtor to propose a formal repayment plan to creditors. 

A personal insolvency agreement (PIAs) under Part X enables debtors to settle debts without declaring bankruptcy in cases of larger debts. Informal arrangements negotiated directly with creditors are also possible. Each option has different eligibility criteria, outcomes, and repercussions on your credit file. Thereby, legal advice is significant before proceeding further.

How does bankruptcy affect my business?

Bankruptcy imposes serious restrictions on business activity in Australia. As a bankrupt individual, you are automatically disqualified from acting as a director of a company. If you have an existing business under your own name, your trustee may require you to cease it or may liquidate its assets. 

Any income earned during bankruptcy above a set limit must be contributed to your estate. If you are in a partnership, bankruptcy may result in dissolution, depending on the terms of your partnership agreement.