Bankruptcy is a legal process you can apply for if you are unable to pay 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.
Bankruptcy gives many people a fresh start but it can have long-term consequences. It is important that you speak to a financial counsellor or a lawyer before making a decision about bankruptcy. You may have other options to deal with your debt issues instead of going bankrupt.
Other organisations that can help
Consumer Action Law Centre
Consumer Action Law gives free legal advice and representation to vulnerable and disadvantaged consumers across Victoria. You can ask a legal for advice about whether you have grounds to dispute a debt or read their self-help kits and fact about dealing with debt and debt collectors.
See the Consumer Action Law Centre's for more information about their services and how they can help you.
Other legal services
Your local community legal can give you legal information and advice. Most services are free.
You can also find a private lawyer near you through the Law Institute of Victoria’s Legal Referral . All law firms included in the Legal Referral Service provide a free 30-minute interview. You can use this interview to understand more about the legal issue and discuss the available options and how much they will cost. Note that the free interview is not 30 minutes of free legal advice. It is very important that you bring your referral letter to your appointment.
We recommend that you contact the Law Institute of Victoria before making an appointment with a private practitioner.
Financial counsellors and financial information
Financial counsellors offer free, confidential and independent advice to people who are in financial difficulty.
A financial counsellor can:
- explain what options you have to clear your debts
- explain your rights
- help you prioritise your debts
- negotiate with creditors on your behalf.
It can sometimes take a while to get an appointment with a counsellor, so it’s important to contact them as soon as possible – don’t leave it till the last minute.
Money has a free financial counselling or you can search for a financial near you.
National Debt Help
The National Debt Help has step-by-step guides on how to tackle common debt problems. You can also call National Debt Help on 1800 007 007 to speak to a financial counsellor. They can refer you to a financial counsellor in your if you need more help.
ASIC’s MoneySmart offers free, trusted and impartial financial guidance. It has tips and tools to help you make better financial decisions and calculators to help you work out your budget.
Watch out for dubious offers of help
Be careful of uninvited offers of help. Some organisations may offer to negotiate with your creditors and to restructure your debts for a fee. They usually write to you after you have been sued. Some of these organisations may be okay but others are not.
Do not sign contracts with any agency without checking their background. Get legal advice on the contract. Also check with Consumer Affairs to see if there have been reports about the agency.
Complaints about banks
You should be familiar with your bank accounts and know the fees and charges that apply for services like using an ATM. You must also have a full understanding of the terms and conditions of your accounts.
Most banks have complaints processes. You should try to resolve your problem with the bank first. If you are unhappy with the outcome, the organisations listed on this page may be able to help.
Complaints about financial services
The Australian Securities and Investments Commission deals with complaints about misconduct or illegal activity by companies and the financial services industry. This includes complaints about insurance companies, insurance brokers, superannuation funds and financial advisers. Their website explains how to complain about your financial problem.
The national Australian Financial Complaints deals with complaints about financial services including banking, credit, loans, general insurance, life insurance, financial planning, investments, stock broking, managed funds and pooled superannuation trusts.
They provide free dispute resolution for consumers and some small businesses who are unable to resolve a dispute directly with their financial services provider. This is an alternative to court proceedings. Decisions can be binding on participating financial services providers.
Australian Financial Security Authority
The Australian Financial Security administers personal insolvency laws. It can supply you with all the necessary bankruptcy papers and refer you to a financial counsellor or other appropriate body for assistance. You can call the Australian Financial Security Authority from anywhere in Australia on 1300 364 785.
Financial Ombudsman Service
The national Financial Ombudsman deals with complaints about financial services including banking, credit, loans, general insurance, life insurance, financial planning, investments, stockbroking, managed funds and pooled superannuation trusts.
The service provides free, accessible dispute resolution for consumers and some small businesses who are unable to resolve a dispute directly with their financial services provider. External dispute resolution processes can help to resolve disputes through negotiation or conciliation as an alternative to court proceedings and can make decisions that are binding on participating financial services providers.
Resources about debt and bankruptcy
The resources on this page will help you understand:
- debt and financial issues
- what to do about them.
See a list of all our free publications and .
Resources from other organisations
- Youthlaw has a collection of fact sheets and information on consumer credit and debt .
- The Energy and Water Ombudsman (Victoria) has information and resources about energy and water issues, providing Victorian customers with free, accessible, informal and fast dispute resolution.
- Australian Securities and Investments Commission (ASIC) guide to Dealing with debt collectors: know your rights, what to do and how to get .
- Australian Financial Security Authority Personal insolvency information for debtors contains information about what to do if you are finding your debt unmanageable, including bankruptcy and other formal options.
How we can help
Contact us for free information about the law and how we can help you with your legal issue.
- Speak to us
- Help in your language
- Support if you are deaf or find it hard to hear or speak on the phone
If we can’t help, we can refer you to other organisations that can.
Disclaimer: The material in this print-out relates to the law as it applies in the state of Victoria. It is intended as a general guide only. Readers should not act on the basis of any material in this print-out without getting legal advice about their own particular situations. Victoria Legal Aid disclaims any liability howsoever caused to any person in respect of any action taken in reliance on the contents of the publication.
We help Victorians with their legal problems and represent those who need it most. Find legal answers, chat with us online, or call us. You can speak to us in English or ask for an interpreter. You can also find more legal information at www.legalaid.vic.gov.au
Reviewed 16 January 2023