What are the consequences of bankruptcy?
Although bankruptcy can provide relief if you are unable to repay your debts, there are consequences which may affect you. Being aware of these consequences can help you decide if this is the best option for you. Please remember Bankruptcy is not a ONE SIZE FITS ALL solution. Each case is different and each outcome may not be the same. It is important you speak to an expert in these matters. Armada Advisory are partners with experts in Bankruptcy and our staff will inform you of all the information around bankruptcy and make sure it is the right solution for you and your family.
Contact a Armada Advisory expert today and let them assist you in making the right decision today.
You will have a trustee that will manage your bankruptcy
A trustee is the person or entity that manages your bankruptcy. They work with you, and your creditors[?], to achieve a fair and reasonable outcome for all. During bankruptcy, you have an obligation to provide information to your trustee, including changes to your circumstances. This may involve supplying books, bank statements and other documents that the trustee asks you to provide.
When you apply for voluntary bankruptcy, you are able to nominate a registered trustee of your choice. If you don’t nominate a trustee, we normally appoint the Official Trustee (AFSA). In some cases, the Official Trustee may transfer the administration of your estate to a registered trustee.
Bankruptcy may affect your income, employment and business
For more information see AFSA: How does bankruptcy affect my income and employment?
Bankruptcy does not release you from all debts
Most unsecured debts are covered in bankruptcy – this means you no longer have to repay these debts. There are some exceptions.
For more information see AFSA: What happens to my debts when I’m bankrupt?
It affects your ability to travel overseas
You must request permission from your trustee to travel overseas. It’s an offence to travel overseas without consent in writing. Your trustee may ask for further details to consider your request. Armada will assist you with this process.
Your name will permanently appear on the National Personal Insolvency Index (NPII)
The National Personal Insolvency Index is a searchable public register listing insolvency proceedings in Australia.
Bankruptcy can affect your ability to obtain future credit
If you apply for credit over a set amount, you must inform the credit provider of your bankruptcy. Credit reporting agencies keep a record of your bankruptcy for:
- 5 years from the date you became bankrupt or
- 2 years from when your bankruptcy ends, whichever is later.
For more information see AFSA:
Your trustee may sell your assets
You are able to keep:
- ordinary household goods
- tools up to a set amount used to earn an income and
- vehicle(s) with a value up to a set amount.
Your trustee can sell other assets including your house and property. You must not dispose of any property belonging to the trustee. You must declare any assets you have when you apply for bankruptcy and any you receive during bankruptcy.
For more information about which assets a trustee can claim see AFSA: What can be taken or sold in bankruptcy?
You may lose the right to take or continue legal action
If you’re involved in any legal action, you need to inform your trustee. If you have a pending court case, you should contact the court to confirm whether you must still attend. Contact the Commonwealth courts.
Bankruptcy normally lasts for 3 years and 1 day from the day you file your statement of affairs
This starts from the day AFSA accept your bankruptcy application. If a creditor makes you bankrupt, AFSA calculate the bankruptcy period from the date you file your statement of affairs. In some cases, your trustee can lodge an objection to extend the bankruptcy for up to eight years.
Contact a Armada Advisory expert today and let them assist you in making the right decision today. Information has been provided by AFSA’s Website.