How to Go Bankrupt · independent guidance since 1988
How to go bankrupt in Australia, step by step.
What actually happens, in plain English, and what to check before you lodge anything.
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If your debts can’t be paid and there’s no realistic way back, bankruptcy can draw a line under them. You apply yourself through the Australian Financial Security Authority (AFSA) by lodging a debtor’s petition and a statement of your affairs. Once AFSA accepts it you’re bankrupt, a trustee is appointed, and most unsecured creditors have to stop chasing you. Bankruptcy usually lasts three years and one day. During that time the trustee can sell assets that aren’t protected, you may have to pay part of any income above a set threshold, and you can’t manage a company or travel overseas without the trustee’s permission. The order matters. Before you lodge, check whether a debt agreement or personal insolvency agreement would suit you better, and whether there’s equity in a home or other assets you want to protect. We coordinate the process with you and the trustee, and we’ll tell you straight if bankruptcy isn’t the right move.
The steps, in order
- Check the alternatives: a negotiated settlement, a debt agreement or a personal insolvency agreement.
- List everything you own and everything you owe.
- If you need breathing space, lodge a declaration of intention with AFSA. It stops unsecured creditors taking action for 21 days.
- Lodge your debtor’s petition and statement of affairs with AFSA.
- A trustee is appointed and manages your bankruptcy. You’re usually discharged after three years and one day.
Plain-English FAQ
How long does bankruptcy last?
Usually three years and one day from when AFSA accepts your petition. The trustee can extend it to five or eight years, for example if you don’t cooperate. Your name stays on the National Personal Insolvency Index permanently.
Will I lose my house?
If you own a home with equity, the trustee can sell it or let you buy back the equity. Superannuation is generally protected, and so are ordinary household items and tools of trade up to set limits. If the house matters, talk to us before you lodge anything.
Can I stop creditors while I decide?
Yes. A declaration of intention to present a debtor’s petition, lodged with AFSA, gives you 21 days in which unsecured creditors can’t take enforcement action against you. It buys time to decide. It isn’t the answer on its own.
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