Business as usual. We're open for face to face meetings, phone and video calls.

Is your businesses suffering? Contact Bankruptcy Advisory Centre for bankruptcy advice, liquidations, and administration. Your one stop shop.

Does Bankruptcy Clear Tax Debt in Australia?

What Are The Benefits Of Bankruptcy?

Bankruptcy is a major decision that should only be considered after exhausting all other available options for debt payment. While specific circumstances could vary among different debtors, it is essential to fully understand the bankruptcy process in Australia, particularly the benefits and drawbacks of bankruptcy. When you are fully aware of the entire process, it will help you in making an informed decision.

If you are a non-business, insolvent debtor with no valuable properties, then bankruptcy could provide you a fresh financial situation without being constantly bothered by your creditors and the fear of any legal action.

However, if you are a business debtor or have a valuable property under your name, bankruptcy could be a devastating experience since you could face loss of income and assets but it can still give you a way out of a tricky financial situation.

It is important to consult an experienced bankruptcy professional to weigh your options and understand the consequences to learn how the bankruptcy will impact you.

Advantages of Bankruptcy

While applying for bankruptcy should be the last resort, there are several benefits of declaring yourself bankrupt, including:

  • The majority of your debts will be extinguished once the bankruptcy is discharged. All the provable debts before you are declared bankrupt will be cancelled, with some exceptions.
  • Once you are declared bankrupt, the creditors won’t be able to take any legal action against you. All further communications between you and your creditors would be through the trustee assigned to your case during your bankruptcy. The stress of creditors constantly contacting you for the debt will be eliminated.
  • If you don’t have any dependents and earn an annual income that’s less than $60,515 (after tax) (as at 1/1/22), your income won’t be taken to pay the debts. Low-income earners are allowed to make voluntary payments if they want to their trustee but are not obliged to do so.
  • The Bankruptcy Act of 1966 in Australia provides protections to personal injuries compensation payments, life assurance payments, and superannuation payments. Through this Act, some of your assets bought through these payments can also be protected. However, these assets and payments can’t be protected if you have not declared bankruptcy and your creditors successfully file a court order payment of debt.
  • Under this Act, social security payments are also protected.
  • When you declare bankruptcy, some of your property can be protected and can’t be taken away for debt payment. This includes all necessary household goods and furniture, including a phone and personal computer, primary mode of transportation, including a motorbike or car that is worth less than the indexed amount.
  • You might be asked to pay some percentage of your income if you have leftover money after paying for usual living expenses, like clothes, food, rent, and even your kid’s pocket money unless it gets assessed as compulsory contribution. This could come as a significant relief to know that your basic necessities will be covered.
  • You would be able to work as a sole trader with some conditions.
  • You would still be allowed to travel within Australia and can even travel abroad if you get permission from your trustee.

These are some of the many benefits you can have once you are declared bankrupt, but it is best to consult a bankruptcy expert to ensure declaring bankruptcy is the best option for you, depending on your situation.

Drawbacks of Bankruptcy

Being declared bankrupt also comes with its set of disadvantages, which is the reason why it should always be taken as a last resort. Here are some of the drawbacks of declaring yourself bankrupt:

  • You will face difficulties in accessing credit after your bankruptcy. This happens because the bankruptcy record is updated in your credit report and stays for the next seven years. The creditors will review your credit report whenever you want to access credit and might refuse your request when they find out you were bankrupt.
  • A permanent record of your bankruptcy will be kept with the Bankruptcy Inspector General. Anyone would be able to access the bankruptcy records for a fee and view them on National Personal Insolvency Index (NPII).
  • You might be asked to hand over your passport to your trustee and must get permission if you want to leave the country. You will be penalised if you try to delay or defeat the creditors by trying to leave the country.
  • It is a criminal offence to obtain a credit of more than $6,065 (indexed, as of 1/1/22), including writing cheques or hiring of goods, if the creditor has not been informed about your bankruptcy.
  • If you fail to cooperate with your trustee and neglect to fulfil your duties, like informing your trustee about a change of address or details about your earnings, the Trustee could extend your bankruptcy by up to 5 years, and/or even prosecute in some cases.
  • You will end up losing your valuable properties.

Should You File For Bankruptcy?

Whether filing for bankruptcy is the right decision for you or not will depend on your unique circumstances. As stated earlier, declaring yourself bankrupt should be your last option. It is recommended to get in touch with a bankruptcy expert to go through all available options.

If you can prove that you can’t make your debt payments when they are due, have tried all other available solutions to repay debt, and are a citizen of Australia or have residential or business connections with Australia, declaring bankruptcy might be a solution for you. Get in touch with us for a free consultation.

Reviews

  • Positive: Professionalism, Quality, Responsiveness, Value

    I had a very difficult time with my EX. I suffered domestic violence and spent a long time trying to dig myself out of the situation where I had our property in joint names with my ex. I had no idea about bankruptcy. I had many worries and questions.

    My ex had made a consent order on me to sell but the house couldn't be sold due to myself falling into hardship paying out for everything just to keep myself afloat. My ex was still expecting 50% of all debts and costs even though i was paying 100% for last 3yrs.

    I panicked and my ex became very abusive over the phone so I googled bankruptcy and found Andrew's website it must if been fate. I called Andrew straight away and saw him ASAP I was feeling very lucky to be fitted in so quickly

    Andrew has made a promise to look out for me with the trustee and to make if anyone asks me for money, i tell them these exact words: Sorry i can't help, im bankrupt here the reference number speak to my trustee.

    Such a great thing I have found. My life saver.
    I would of done this 2 years ago had I find. It feels odd to say this but I can finally have the life of not worrying about any debt over my head. I no longer have to deal family courthouse for property matters.

    Andrew did what no lawyer, or financial councillor could do. Even if i paid lawyers 2,00000,00000 (not that i have that kind of moolah) id still end up nowhere and wasting my hard earned precious money.

    Rebecca Davis
  • 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.

    Kristy
  • Making the decision to go bankrupt was not easy however once I had spoken to Andrew i felt all my anxiety disappear. Andrew does not judge you and he has an innate ability to put you at ease. He took care of the whole process for me again reducing the stress involved with completing paperwork.
    Thank you very much.

    Hayley Eastough
  • I will definitely recommend Andrew Bell to anyone contemplating bankruptcy. Don't wait! Andrew is there to help. With his knowledge, he can advise you of the best path to take and assist with the mind boggling paperwork.

    Best of all, he is there for you through your entire bankruptcy period. Get your life back, it's not as bad as you think. Thank you Andrew for lifting the burden and allowing me to move on.

    Karilyn Mahon
  • I saw Andrew for 'advice only' on possible bankruptcy due to a divorce. Left an hour later with the paperwork all done and feeling like a new person!

    Andrew was extremely welcoming and made me feel so comfortable with my decision to proceed immediately.

    This was the best investment I have ever made and cannot speak highly enough of Andrew. He doesn't just give excellent service his follow up afterwards is amazing. Thankyou Andrew you made my 'new' life so easy to achieve!

    Vicki Johnston
  • Andrew was very helpful in helping me through the bankruptcy process, as a single mother left with a massive debt from my ex and our previous marriage. I was struggling to keep my head above water on a week to week basis.

    Andrew made me feel at ease immediately and helped me every step of the way, he happily and professionally answered any and all questions I had before, during and after the process. Thanks so much for your help Andrew!

    Aisha Edmonds
  • Would highly recommend Andrew to anyone having financial difficulties. Andrew made me feel very comfortable - he took care of everything and keep in regular contact with me throughout the whole process.

    Service was fantastic and he also keep in regular contact with me when everything had been finalised Thanks Andrew! can now get my life back on track.

    Cassandra Walsh
  • Very prompt service and excellent source of knowledge and information, I highly recommend Andrew's service for a quick turn around of circumstances.

    Eve Damjanovich
  • Andrew put my mind at ease in one easy appointment. Very satisfied with the outcome and service provided. Highly recommend Andrew.

    Tracey Douglas
  • Andrew was a steadying hand with his advice.Showing that things aren't as bad as first thought nor any obstacle insurmountable. If you have questions needing answers, Andrew is the person to ask. Thanks for your advice Andrew.

    Shane Thompson
  • Andrew was very knowledgeable, caring, helpful and compassionate when I went and saw him. He made me feel that I wasn’t the loser and failure that I thought I was being. Even down to the box of tissues on the table.. which I needed. Highly recommend to go see Andrew if your struggling. There is life after!

    Joanne Parker
  • Andrew and his team do an excellent job of helping their clients with bankruptcy advice and it is a pleasure to work with him.

    Gareth Lane
  • Don't hesitate contacting Andrew, I was stressed, struggled sleeping through debt. Andrew put me at ease. He listened to my situation and we decided on my next move. Andrew is professional and easy to talk too. I would recommend highly to anyone who wants help to give him a call. I appreciate your support Andrew. Regards Brett.

    Brett
  • Andrew has given me back my life!!! After living paycheck to paycheck, I didn’t know what to do. Until I made the big step and booked an appointment with Andrew. As soon as I left his office I felt a huge weight lifted!!!

    Deezy H
  • Andrew was prompt, organised, friendly and efficient with the processing of my documents and made everything very simple for me so I didn’t need to deal with the added pressure and stress. Thank you Andrew for allowing me to start afresh and getting it done within a matter of weeks.

    Kristy-lee

Fill the form below to download our Free Expert Bankruptcy Guide

What you need to know before declaring bankruptcy