Bankruptcy

Bankruptcy is one option that many people consider when they find themselves smothered under a mountain of debt. Anyone can apply for voluntary bankruptcy.

When you declare yourself bankrupt a trustee will be appointed to sort out your financial affairs and they will sell your assets and may collect contributions from your pay to cover your debts.

You will usually remain bankrupt for three years and then you are automatically discharged.

The consequences of bankruptcy

Bankruptcy will have the following consequences:

• A record of your bankruptcy will be made a public record.
• Your bankruptcy will be listed with a credit reporting agency for 7 years and this will make it difficult to get credit in this period.
• Assets that you own will be taken by the trustee and may be sold.
• Part of your income may need to be directed to your bankruptcy estate.
• Assets that will not be taken include your clothes and necessary household furniture, tools of trade to a specified value and your car to a specified value.

What debts are not covered?

Bankruptcy will not clear the following debts:

• court penalties or fines;
• child support;
• social security overpayments;
• student loans and HECS.

Bankruptcy doesn't cover current electricity and other utility services. You will need to organise to pay these bills or make arrangements to pay the account in instalments to keep these services connected.

Bankruptcy is a last resort

There is help available. There are a number of financial counsellors in the Territory you can talk to. They will act as an advocate on your behalf and provide you with professional advice.

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