Video chapters
Quick answer
Bankruptcy is a formal personal insolvency process with consequences for assets, income, credit, public records, some employment and overseas travel. It releases many but not all unsecured debts, and current thresholds and indexed amounts change; compare the available options and get financial and legal advice before applying.
About this historical recording
This recording is retained because it explains the issue in plain language and forms part of the Go To Court video archive. The current answer, practical steps and official sources on this page take priority wherever legislation, terminology, institutions, deadlines, penalties or service arrangements have changed.
What to do now
- List the full position: Prepare all debts, creditors, income, assets, recent transactions and guarantees.
- Check every debt: Identify secured debts and liabilities that may not be released by bankruptcy.
- Compare options: Review hardship, negotiation, debt agreements, personal insolvency agreements and bankruptcy using current AFSA information.
- Get independent help: Speak with a financial counsellor and obtain legal advice about assets, business, litigation, travel or disputed debts before acting.
Transcript
If you're thinking about going bankrupt, seek legal advice before you do. There are consequences of bankruptcy, it extends for three years. So during that time, you're not allowed to own assets in your own name. Any income that you earn will be paid to the trustee. You're allowed to own assets and income to a certain value, it's not much. So things like tools of trade, if you're a tradesman, some personal and household items and you're allowed to earn income up to a certain value.
But other than that, pretty much everything else goes to the trustee. So for the three years that you are bankrupt, you won't be able to be director of a company, own a business, you won't be able to acquire assets, buy a house, anything of that nature. If you're gifted an asset, someone gives you property, that will invest in the trustee as well. For the three years you're bankrupt, you won't have a lot to your name.
And after bankruptcy, after you've been declared bankrupt, a note about your bankruptcy is included on a national personal insolvency index. And that means any future creditor can search to see if your name is listed as a default bankrupt. So you will show up on a credit check, every time you apply to increase the value on your credit card, if you apply for a home loan, if you apply to buy a large screen TV from a furniture company and you want to apply for some credit, it will show up.
And it will probably affect your ability to get credit.
Current sources
Sources checked 4 September 2026.
Important
This page provides general information only; it is not legal advice and does not take account of your circumstances. The embedded video is a historical recording. Laws, court arrangements, procedures, fees, deadlines and official guidance can change. Check the current sources above and obtain advice from a qualified lawyer about your situation.