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Bankruptcy

Bankruptcy is a legal process where you are declared to be unable to pay your debts.

Bankruptcy gives many people a fresh start but it can have long-term consequences. It may not be the best option for you.

Speak to a financial counsellor or a lawyer before making a decision about bankruptcy. Even if a creditor is threatening to send you bankrupt, you may have some options if you act quickly. See ‘Getting help with financial problems’ (link below).

When you are declared bankrupt, the control of most of your financial affairs is given to a trustee. Your creditors have to deal with the trustee about payment of your debts.

There are two ways of becoming bankrupt:

  • you can volunteer to become bankrupt
  • a person or business that you owe money to can apply for you to be made bankrupt.

See ‘Becoming bankrupt’ (link below) for information about the process for each option.

The Insolvency and Trustee Service Australia (ITSA) is the government agency responsible for the administration and regulation of the bankruptcy system in Australia.

More information

Becoming bankrupt

Getting out of bankruptcy

Getting help with financial problems

Creditors' options

Debtors' options

Debtors' rights

Related publications

Debt problems: the law, your options

Weighing it up

Related websites

Insolvency and Trustee Service Australia – Bankruptcy

How we can help

Call Victoria Legal Aid’s (VLA) Legal Information Service for free information over the phone about the law and how we can help you with your legal problem. You can speak to a legal information officer in English or ask for an interpreter. Phone (03) 9269 0120 or 1800 677 402 (country callers), Monday to Friday from 8.45 am to 5.15 pm.
VLA’s other free legal services include:

  • advice at VLA offices and other locations across Victoria
  • lawyers who are on ‘duty’ to help at many courts and tribunals.

For some matters we can provide you with a lawyer to help you run your case.

To find out more about any of our legal services see What we do.

Who else can help?

See Getting help with financial problems for details of free financial counselling services in your area and other organisations that can help you.