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HOW DO I GO BANKRUPT
HOW DO I GO BANKRUPT?
Reproduced by express permission form the Commonwealth Government, Insolvency
and Trustee Services Australia.
June 2004 Edition
Why choose bankruptcy?
If you cannot pay your debts, and have been unable to come to a compromise or
arrangement with your creditors, then you may decide to go bankrupt.
Bankruptcy is a process where people receive the protection of the Bankruptcy
Act.
The Prescribed Information booklet details alternatives to bankruptcy and the
obligations and consequences of bankruptcy. Financial counsellors and other
advisers can also give you information about bankruptcy and alternative options.
See the ITSA website www.itsa.gov.au or contact ITSA offices (see rear cover)
for booklets or lists of contacts.
Warning:
The consequences of bankruptcy are serious. It should only be chosen after
you have looked at every other option.
Can anyone go bankrupt?
There are no income, asset or debt limits if you decide to apply for
bankruptcy.
To become bankrupt you:
- cannot have an unfinalised Part IX Debt Agreement or Part X
agreement in place, and
- must be ordinarily resident in Australia; or have owned a
house or business, or have carried on a business, in Australia, or
- must be personally present in Australia when you lodge your
debtor’s petition.
If you have any questions please ask ITSA. Do not lodge your bankruptcy
documents if you do not understand how it will affect you.
How do I become bankrupt?
To apply to become bankrupt you need to complete and lodge the following
three documents with the ITSA office in your state or territory. These documents
are available from ITSAs website and offices, registered trustees and many
financial counsellors.
Note:
- you can lodge your documents in person, by post or by fax
- you cannot lodge your documents by email.
1. Debtor’s Petition
This is your application to become bankrupt. You need to:
- answer every question
- sign and date it in front of a witness (who must also sign
and date it).
Warning:
The presentation of a Debtor's Petition is an act of bankruptcy. If your
Debtor's Petition is rejected, a creditor can use this to apply to the Federal
Court or Federal Magistrates Service to make you bankrupt.
2. Statement of Affairs
This document identifies who you are. It will provide your trustee with
essential information, such as your income, assets, debts and business dealings.
You need to:
- attach any documents if asked to do so
- sign it.
Warning:
There are penalties under the Bankruptcy Act for providing false or
misleading information.
3. Acknowledgement that you have received and read the Prescribed
Information booklet
The Bankruptcy Act prescribes that information about alternative options to
bankruptcy and the consequences of bankruptcy must be given to people who are
contemplating bankruptcy. You need to:
- read the booklet
- sign and then detach the Acknowledgement on page 19
- attach the signed Acknowledgement to your bankruptcy
papers.
Creditors can make you bankrupt
One of your creditors may apply to the Court in a Creditor's Petition to make
you bankrupt if you have committed what is called an act of bankruptcy.
The most common act of bankruptcy relied on by a creditor is a failure to
comply with a bankruptcy notice requiring that the creditor's debts, of at least
$2,000, be paid within 21 days.
What happens after I lodge my bankruptcy documents with ITSA?
ITSA will decide whether to accept your Debtor's Petition within one business
day (Monday to Friday) of you lodging your documents.
ITSA examines your documents to make sure that:
- they have been fully and properly completed and signed
- all necessary attachments are included
- there is no reason to reject your petition.
ITSA will not accept your documents if there is information or attachments
missing. Your documents will be returned to you for amendment.
In a very few cases, your Debtor's Petition may be rejected if ITSA
considers that:
- you are able to pay your debts within a reasonable time,
and either
- you have previously been bankrupt on your own petition
three or more times or once in the last five years, or
- you are unwilling to pay one or more creditors or creditors
in general.
ITSA will talk to you before deciding to reject your petition. If your
petition is rejected, ITSA will write to you to explain why your Debtor's
Petition has been rejected and how to obtain a review of this decision.
More information is available in the pamphlet:
Debts and Creditors: What happens to them if I go bankrupt?
If your Debtor’s Petition is accepted
- You become bankrupt within one day.
- You are given an administration number.
- ITSA records your bankruptcy on the NPII (National Personal
Insolvency Index) database. Your name will appear on the NPII forever.
- A trustee will administer your bankruptcy. ITSA will be
your trustee unless a registered trustee has consented to be your trustee.
- Your assets, income and debts must be disclosed to your
trustee.
- Your trustee advises your creditors of your bankruptcy and
provides them with a summary of your Statement of Affairs.
- Your trustee will sell your divisible assets.
- Your trustee will assess you for income contributions. You
may have to pay contributions for the benefit of your creditors.
- You are released from certain debts when you are discharged
from bankruptcy. However, there may be some debts you still have to pay.
More information is available in the pamphlets:
Debts and Creditors: What happens to them if I go bankrupt?
Assets: What happens to my assets if I have to go bankrupt?
Contributions: Will I have to make payments from my income?
Your trustee
If you make yourself bankrupt you may choose your own trustee to administer
your bankruptcy. If you do not choose a trustee, ITSA will be your trustee.
If a creditor makes you bankrupt, they choose your trustee.
During your bankruptcy, your creditors may decide to change your trustee, and
trustees may also obtain the consent of another trustee to replace them.
When will I be discharged from bankruptcy?
A discharge from bankruptcy normally happens automatically 3 years and 1 day
after your Statement of Affairs has been lodged with and accepted by ITSA.
In some circumstances, the period of your bankruptcy may be extended to
either 5 or 8 years if your trustee lodges an objection to your discharge with
ITSA. An objection is usually lodged because a bankrupt has not co-operated with
the trustee or there has been some misconduct.
Your bankruptcy can only be annulled (cancelled) earlier through:
- payment of your debts in full, or
- an offer to creditors (composition), or
- application to the Court.
More information is available in the pamphlets
Annulment and Discharge
Where to contact us
Telephone 1300 364 785
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
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