How Long Is Bankruptcy In Australia?
Declaring Bankruptcy can be a challenging experience, as it can have a lasting impact on your life. While specific circumstances could vary, it is essential to fully understand the bankruptcy process, particularly the disadvantages of filing bankruptcy.
Once you are fully aware of the entire process, it will help you make an informed decision.
Bankruptcy might seem easy, but there are numerous things you should know before deciding to file. When considering bankruptcy, it is natural to wonder how long bankruptcies last in Australia, if bankruptcy clears all debts, what happens when you declare bankruptcy, and what happens after bankruptcy discharge. The duration stays on our record. Understanding these crucial bankruptcy timelines is essential to making sure you are making the right decision.
It is essential to consult an experienced bankruptcy professional to weigh your options, understand the consequences, and learn how the bankruptcy will impact you.
What are the alternatives to filing for bankruptcy?
If you are a non-business, insolvent debtor with no valuable properties, then bankruptcy could provide you with a fresh financial situation without being constantly bothered by your creditors and fearing legal action. If you have a valuable property under your name, then bankruptcy could be a devastating experience, as you could face a loss of income and assets. Other options, such as Debt Restructuring or a Debt Agreement, may be a better option for you, but if bankruptcy is your last resort, it can still give you a way out of a tricky financial situation if done correctly.
How Long Does It Take to File for Bankruptcy in Australia?
When you decide that bankruptcy is the only solution to get out of your financial problems, you must complete and submit the bankruptcy form. Ensure all the essential things are with you while filling out the form.
It will take 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 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 your debts and allow you to start afresh. However, you would still have to pay some debts not covered by bankruptcy and face the serious and lasting consequences of bankruptcy. Therefore, it is essential to consult a bankruptcy expert before declaring bankruptcy.
How Long Is Bankruptcy in Australia?
Typically, bankruptcy in Australia lasts three years and one day, but it could be extended, depending on the situation. After that, you have an automatically discharged bankruptcy unless your trustee extends it.
Standard years from the date applied: three years and one day.
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.
Extending Bankruptcy to Years Beyond Three And One Day
If you present the debtor’s petition, the standard period begins when the official receiver at AFSA accepts your application. However, suppose you are made bankrupt via a sequestration order made through a court order on the application of one of your creditors. In that case, 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, you will stay bankrupt indefinitely if you fail to file the bankruptcy form.
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 an objection to your bankruptcy discharge that could result in your bankruptcy period extending 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 rare, but it is possible to get your bankruptcy annulled. You must 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 a time limit to file for bankruptcy in Australia. To apply for bankruptcy and be accepted, you must meet the following two requirements:
- You can’t pay your debts when they are due
- 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 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 an individual should be eligible for a loan or any credit product. It also helps determine the interest rate you would be charged.
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 you can be after discharge
- You must inform all your creditors about your bankruptcy when opening a new business
- You can’t travel abroad unless your trustee grants you 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 must inform the lenders about your bankruptcy if the loan amount exceeds the specified limit. This specified limit gets indexed every quarter, so it is essential to always check with or consult a bankruptcy specialist first.
Getting the Right Advice
“Declaring bankruptcy is a big decision. You should use professional bankruptcy assistance to make an informed decision,, fully understand the consequences, and determine how long bankruptcy will affect your life. Our teams of experts have over 30 years of experience and will give you tailored advice that is related to your individual situation.”
Andrew Bell Bankruptcy Advisor
With over 30 years of experience in debt solutions and bankruptcy in Australia Andrew can find a solution for you.
“Nothing is more satisfying to me than knowing that I’ve helped someone get back on their feet by guiding them through the Bankruptcy Process. Rest assured, you’re in good hands with me as we solve your financial problems together.”