How does bankruptcy work in Australia?

Bankruptcy is a legal process, administered by AFSA, for people who can't pay their debts. It normally lasts three years and one day. During that time a trustee takes control of certain assets and can require contributions from income above a threshold, and most unsecured debts are ultimately released.

It has real consequences: it's recorded on the National Personal Insolvency Index, affects your credit for years, can limit some kinds of work, and restricts overseas travel without the trustee's permission. Some debts (like most court fines and child support) aren't cleared.

Bankruptcy isn't the only option — a Part IX Debt Agreement or informal arrangement may suit you better. Get advice before you act, so you choose the right path. Waters & Co. advises on bankruptcy and debt solutions.