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Bankruptcy In Australia: Various Timelines To Consider

How Long Is Bankruptcy In Australia?

Declaring bankruptcy can be a challenging experience as it can leave a lasting impact on your life. If you are facing financial distress and are considering filing for bankruptcy, it is essential to ensure it is your last resort.

Bankruptcy might seem easy but there are numerous things you should know before deciding to file for one. When considering bankruptcy, it is natural to wonder how long the process will take, how long would it last, and the duration it stays on our record. Understanding these crucial timelines of bankruptcy is essential to make sure that you are making the right decision.

How Long Does It Take To File For Bankruptcy in Australia?

When you decide that bankruptcy is the only solution for you to get out of your financial problems, you would first need to complete the bankruptcy form and submit it. Be sure to have all the important things with you while filling the out form.

It will take you anywhere from 30 to 60 minutes to complete and submit the form if you have all the information available. Remember, this form is a Statutory Declaration and providing misleading or untrue statements could cause significant penalties including monetary fines and/or jail – do not rush the preparation of the Bankruptcy Form.

Once you have submitted the form and it has been approved, you will be declared bankrupt, indicating you can’t pay off your debts. If you are lodging the form electronically, it may take several days for AFSA to review and approve the document.

This legal process will free you from almost all of your debts and give you an opportunity to start afresh. However, you would still have to pay some debts that are not covered in bankruptcy and also have to face the serious and lasting consequences of being bankrupt. This is the reason it is important to consult a bankruptcy expert before declaring bankruptcy.

How Long Does Bankruptcy Last In Australia?

Typically, bankruptcy in Australia lasts for three years and one day but it could be extended, depending on the situation. Let’s have a closer look:

Standard Three Years And One Day Period

As mentioned earlier, the standard duration of bankruptcy is three years and one day from the day your bankruptcy form is accepted by the Australian Financial Security Authority (AFSA). At the end of this period, you will be released from bankruptcy.

Extended Period

If you present the Debtor’s Petition, the standard period begins when the official receiver at AFSA accepts your application. However, if you are made bankrupt via a Sequestration Order that is made through a Court order on the application of one of your creditors, then the bankruptcy period doesn’t commence until you lodge the Statement of Affairs.

This means that even when you become bankrupt, you won’t be discharged from bankruptcy until the end of three years, starting from the day the bankruptcy form was filed. Moreover, if you fail to file the bankruptcy form, you will stay bankrupt indefinitely.

Aside from this, if you fail to follow the rules and guidelines highlighted by your trustee, your bankruptcy period can be extended due to “bad behaviour.” Your trustee can file for an objection to your bankruptcy discharge that could result in your bankruptcy period getting extended to five or eight years, depending on the extent and nature of the bad behaviour.

Is It Possible to Finish The Bankruptcy Early?

It is a rare occurrence but it is possible to get your bankruptcy annulled. You have to pay back all your creditors in full or make an offer your creditor accepts.

How Long Do I Have To File For Bankruptcy?

There isn’t any time limit to file for bankruptcy in Australia. In order to apply for bankruptcy and get accepted, you have to meet the following two requirements:

  1. You can’t pay your debts when they are due
  2. You are an Australian citizen, are present in the country, or have a business or residential connection to Australia

There is also no maximum or minimum amount of income or debt you must have in order to be eligible to apply for bankruptcy. There isn’t any fee required to file for bankruptcy.

How Long Does Bankruptcy Stay On Your Record In Australia?

Once you have been declared bankrupt, it will stay on your credit report for either two years from when you are released from bankruptcy or five years from the day you were declared bankrupt. It will depend on whichever one is the latest.

Throughout the time the bankruptcy appears on your credit record, you are bound to struggle when trying to obtain credit or loans.

Aside from remaining on your credit record, your bankruptcy will also negatively impact your credit ratings. Your credit rating or credit score is the number that the credit reporting agency calculates. It highlights your credibility and trustworthiness as a borrower.

Most lenders factor in the credit score when deciding whether or not an individual should be eligible for a loan or any credit product. It also helps determine the interest rate you would be charged with.

While it hasn’t been specified by credit reporting agencies how much bankruptcy can impact the credit score, it certainly takes a long time to recover from it.

Some other consequences include:

You can’t be a director of a company whilst bankrupt, but can be after discharge

    • You have to inform all your creditors about your bankruptcy when opening a new business
    • You can’t travel abroad unless your trustee grants you the permission
    • You can’t own assets that are worth more than a threshold amount
    • You are not released from all your debts

What Do I Need To Disclose When Applying for a Loan After Bankruptcy?

When you apply for a loan after being declared bankrupt, you have to inform the lenders about your bankruptcy if the loan amount is over the specified limit. This specified limit gets indexed ever quarter, which is why it is important to always check or consult a bankruptcy specialist first.

Using the right professional bankruptcy assistance, you would be able to make an informed decision and come out of your financial problems. Get in touch with us for a free consultation



  • As a Trustee in Bankruptcy, Ross Thomson is often required to think outside the box. As well as creative thinking, Ross brings compassion to the table.

    For Ross, it’s important to see the people behind the financial problem –not just numbers.

    Ross recently helped a bankrupt client who lives in a retirement village with her seriously ill husband.

    The unit she & her husband live in is not owned by them, but subject to a 20-year lease.

    The money to be repaid by the management was due only at sale, when the client finally left the retirement village.

    Sale of the unit was likely to take several years &, if he did sell the couple’s unit, Ross realised he would be effectively evicting them from their home, without resources or family to help them.

    Ross decided to contact the retirement village management & put a proposal to them that they prepay some of the moneys they would otherwise pay the client.

    The village management considered the proposal & have agreed to prepay some of the moneys otherwise due.

    The client is relieved that she will not be evicted & can now concentrate on helping her husband through his health issues.

    The moneys paid represented about 75% of what would have been available to creditors if they waited two years.

    It is a win for the client and for the creditors.

  • I made an appointment with Andrew after finding him on google. I was nervous and apprehensive about what to expect but he made the process of bankruptcy extremely uncomplicated and stress free, allowing myself the opportunity to get the fresh start I was so desperate for. Thank you Andrew I could not recommend you enough.

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What you need to know before declaring bankruptcy