Bankruptcy is a legal process for individuals who can not pay their debts on time. Bankruptcy usually lasts for 3 years, this term may be extended for up to 8 years. At the end of your bankruptcy you will be released from the debts. Some debts such as child support and fines will be not affected by bankruptcy.

Your Bankruptcy Trustee will sell all of your assets except:

a) Most ordinary but not luxury household and personal goods
b) Tools of trade worth less than $3,150
c) Motor Vehicle worth less than $6,150
d) Superannuation (subject to limits)

When you are a Bankrupt, you may have following obligations/restrictions:

a) You must keep your Bankruptcy Trustee fully informed as to your residential address and the income you earn
b) You must complete a Statement of Affairs at the commencement of your Bankruptcy
c) You must surrender your passport to your Bankruptcy Trustee
d) You cannot be a director of a company whilst you are bankrupt
e) You may be liable to pay income contributions
f) You cannot incur debts of more than $4,370* without disclosing your bankruptcy
g) You must deliver all of your records to your Bankruptcy Trustee
h) You may be liable to pay income contributions
i) You must disclose to your Bankruptcy Trustee any assets which you may acquire during your bankruptcy
j) Your Bankruptcy term may be extended for up to eight years (if you fail to co-operate with your Bankruptcy Trustee)
k) Any money in your bank account will be collected by your Trustee and your credit cards will be cancelled
*amount current as at January 2007

 

An alternative to bankruptcy is Personal Insolvency Agreement.