This Factsheet outlines some of the things to consider before deciding to become bankrupt.
Ways you can become bankrupt
You can become bankrupt in one of two ways:
1. Creditor’s Petition
A creditor can force you to become bankrupt if the debt is more than $5,000 and they have a court judgment against you.
An application to the court to make you bankrupt is called a 'creditor's petition', and if successful, the court will issue a 'sequestration order', which will have the effect that you will become bankrupt.
2. Debtor's Petition.
You can choose to become bankrupt. To do this you file a ‘debtor’s petition’ with the Australian Financial Security Authority (AFSA).
You should seek information and advice from an appropriately qualified person and carefully consider all the consequences of voluntary bankruptcy before deciding to take this step.
You can get information from a financial counsellor, a lawyer and/or from AFSA.
Access the full PDF below for a complete guide on points to consider before declaring yourself bankrupt.
This resource is under review following recent changes in the law. It may not be current and accurate.