Bankruptcy and its alternatives in Australia

Bankruptcy is one of several ways a person who cannot pay their debts can deal with them under Australian law. This page describes bankruptcy and the alternatives, the role of the Australian Financial Security Authority (AFSA), the National Personal Insolvency Index, the effects of bankruptcy as AFSA states them, how to check registered trustees and debt agreement administrators, and where to get free, independent help, with links to official sources.

This is a free, non-commercial reference page. It is general information only, not financial or legal advice, and it does not say which option suits anyone. It sells nothing, takes no referral fees and does not list or recommend any private firm, trustee, administrator or lawyer. Before you sign anything or pay anyone, talk to a free financial counsellor through the National Debt Helpline on 1800 007 007, and get free legal advice if you have received a bankruptcy notice or court documents. This page is not affiliated with any government body or service listed. Check current details on the official websites linked below.

The guide

What bankruptcy is, the alternatives, what AFSA says about the effects, the public record, who may administer a formal arrangement, and where free help comes first.

What bankruptcy is

Moneysmart, ASIC's consumer website, describes bankruptcy as "the formal process of being declared unable to pay your debts." Personal bankruptcy and the formal alternatives to it are set out in the Bankruptcy Act 1966. AFSA states that bankruptcy "lasts for at least 3 years and 1 day" and that at the end you are "released from most of your debts." Some debts are not released, and bankruptcy has consequences that last beyond its end, so the free services below recommend getting financial counselling and legal advice before applying.

The role of AFSA

The Australian Financial Security Authority (AFSA) is the Australian Government agency that administers the personal insolvency system. Its website explains the options, offers a free insolvency eligibility tool and an options comparison, and handles bankruptcy applications and debt agreement proposals. AFSA describes its eligibility tool as "not legal advice." For help deciding what to do, AFSA points people to the National Debt Helpline's free financial counsellors.

Informal arrangements and hardship requests

Not every debt problem needs a formal option. AFSA says creditors may be willing to give you a lower interest rate, more time to pay or fewer penalties, and that you may be able to apply for a hardship variation if you are experiencing financial hardship. Moneysmart says that when you ask for help, "your lender must consider you for hardship assistance", and that if it refuses it must give reasons. A financial counsellor can help you make the request and negotiate with creditors.

Debt agreements (Part IX)

Moneysmart describes a debt agreement, also known as a Part IX debt agreement, as "a formal way of settling most debts without going bankrupt", and AFSA describes it as a binding agreement between you and your creditors to pay a sum you can afford. AFSA says income, asset and debt thresholds apply (published on its Indexed amounts page), that you must not have been bankrupt, proposed a personal insolvency agreement or made a debt agreement in the previous 10 years, and that some debts are not released. AFSA states that a debt agreement must be managed by a registered debt agreement administrator.

Personal insolvency agreements (Part X)

AFSA describes a personal insolvency agreement as an agreement between you and your creditors to "pay an agreed amount in instalments or lump sum." AFSA says you need a residential or business connection to Australia, must not have proposed another personal insolvency agreement in the previous six months, can keep assets subject to the agreement's terms, and cannot be a company director until you have fully complied with the terms. Unlike a debt agreement, AFSA lists no income or debt threshold for eligibility.

How bankruptcy can start

There are two routes. You can apply yourself (a debtor's petition) to AFSA, or a creditor may apply to the court to make you bankrupt, which AFSA says typically starts with a bankruptcy notice. Legal Aid Queensland warns that "strict time limits apply to respond to court proceedings and/or bankruptcy notices" and advises getting legal advice immediately if you receive a bankruptcy notice or someone threatens to bankrupt you.

Effects of bankruptcy, as AFSA states them

AFSA's consequences page says your trustee "can sell other assets including your house and property", while you can keep ordinary household goods and work tools and vehicles up to set values. If you earn over a set amount, you may need to make compulsory payments to your trustee. You need your trustee's written consent to travel overseas, and AFSA says "it's an offence to travel overseas without consent in writing." There may be restrictions on employment and running a business, and you cannot be a company director. Bankruptcy can affect your ability to get credit, and you must tell a credit provider you are bankrupt when applying for credit over a set amount.

Credit reports and when bankruptcy ends

AFSA states that credit reporting agencies record a bankruptcy for 5 years from the date you became bankrupt, or 2 years from when it ends, whichever is later. When bankruptcy ends, AFSA says you are released from most of your debts, but in some cases your trustee continues to manage the bankruptcy after it has ended. Hardship arrangements are different: Moneysmart says a hardship arrangement's listing on a credit report "is deleted after 12 months."

The National Personal Insolvency Index

AFSA describes the National Personal Insolvency Index (NPII) as "a publicly available electronic record of some personal insolvency proceedings in Australia." It records details such as name, date of birth, address and occupation, the type of proceeding, and the trustee or administrator. AFSA states that a bankrupt's name "will permanently appear" on the NPII. The index is searched through AFSA's Bankruptcy Register Search, which AFSA lists at $15 per search.

Registered trustees and debt agreement administrators

A bankruptcy is managed by a trustee: either the Official Trustee (AFSA) or a registered trustee in private practice. A debt agreement must be managed by a registered debt agreement administrator (RDAA); AFSA does not administer debt agreements. AFSA publishes a list of practising RDAAs and a register of trustees, so you can check that anyone offering to act in a formal arrangement is registered. Being registered is not a recommendation, and you can still get free, independent advice before choosing anyone.

Free help comes first

The National Debt Helpline (1800 007 007) connects callers to free financial counsellors in their state; Moneysmart lists its hours as Monday to Friday, 9:30am to 4:30pm, with live chat at ndh.org.au. Moneysmart describes financial counselling as "a free and confidential service offered by not-for-profit community organisations" and says you should never have to pay for it. Financial counsellors do not give legal advice, so for legal problems, including bankruptcy notices, contact the legal aid commission in your state or territory. Aboriginal and Torres Strait Islander people can call Mob Strong Debt Help on 1800 808 488.

Warnings about debt management and "debt help" operators

Moneysmart warns that "debt management firms can be expensive", that fees can be charged before any service is delivered, and that free services are likely to be available to achieve the same outcomes. It says providers of debt management services must hold an Australian credit licence with a debt management authorisation and be members of the Australian Financial Complaints Authority (AFCA), and that you can check a licence on ASIC's Professional Registers Search. AFSA warns about untrustworthy debt advisors who create "an unnecessary sense of urgency", charge "a fee to submit a bankruptcy application", encourage false statements in bankruptcy paperwork or suggest that bankruptcy or a debt agreement "won't affect a credit rating". Concerns can be reported to AFSA.

Directory

Government bodies and free official services for debt, bankruptcy and the alternatives, instead of a list of firms. Each link goes to the body's own official page.

What is listed. Only government agencies, legal aid commissions and free not-for-profit services are included. No private debt firms, trustees, administrators or lawyers are listed. The list is not complete and is in no particular order.

Not an endorsement. Listing is not a recommendation. This page is not affiliated with any organisation below. Opening hours and contact details change, so check the official page before you call.

Inclusion in this directory is not an endorsement. Links are to official websites as published at the time of checking.

Questions to ask before you sign or pay

Plain questions worth asking before you agree to any arrangement, sign a proposal or pay anyone who offers to help with debt.

Have I spoken to a free financial counsellor yet?

The National Debt Helpline (1800 007 007) offers free, independent and confidential financial counselling. Moneysmart says free services are likely to achieve the same outcomes as a paid firm.

Could an informal arrangement or hardship request work instead?

AFSA lists informal arrangements and hardship variations as options, and Moneysmart says a lender must consider you for hardship assistance when you ask.

Is this person or firm registered or licensed for what they are offering?

Check trustees and debt agreement administrators on AFSA's registers, and debt management firms on ASIC's Professional Registers Search. A debt agreement must be managed by a registered debt agreement administrator.

What will this cost, and when is each fee charged?

Moneysmart warns that debt management firms can charge fees before any service is delivered and that total costs are not always easy to work out. Get every fee in writing.

Is the firm a member of AFCA?

Moneysmart says debt management firms must be AFCA members, so you can complain to AFCA for free if something goes wrong.

Am I being rushed, or told it won't affect my credit?

AFSA lists an unnecessary sense of urgency and claims that bankruptcy or a debt agreement won't affect a credit rating among the warning signs of untrustworthy advice.

Have I read AFSA's own description of the consequences?

AFSA's consequences page sets out the effects on assets, income, travel, employment, credit and the permanent NPII record. Read it before deciding.

Have I received a bankruptcy notice or court documents?

Strict time limits apply. Contact the legal aid commission in your state or territory for free legal advice straight away.

About this page

bankruptcyadvice.com.au is a free, non-commercial reference page published by Radiant Life Distributors Pty Ltd, Adelaide. It is general information only, not financial or legal advice, and it does not recommend any option for anyone. It sells nothing, takes no referral fees and does not list any private firm, trustee, administrator or lawyer. It is not affiliated with, or endorsed by, any organisation listed; listing is not an endorsement. Information was checked against official websites in October 2026; laws, thresholds, fees and contact details change, so confirm current details with the organisations linked above.