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Bankruptcy Law in Australia

Four (4) alternative options to consider if unmanageable debts?


Temporary debt protection (TDP)

TDP provides you with a six-month protection period from being pursued by unsecured creditors, who cannot take enforcement action to recover your debt.  The protection period gives you time to seek advice on your next steps.  TDP is that your name will not appear on the National Personal Insolvency Index, which is a searchable public register.

Debt agreement, also known as Part IX (9)

A debt agreement is a legally binding agreement between you and your creditors. You negotiate to pay a percentage of your total debt over a period of time to your debt agreement administrator, rather than to your creditors. After the agreement ends, creditors cannot recover the rest of your debt.  Part IX appear on the National Personal Insolvency Index for a limited time.


Personal insolvency agreement (PIA), also known as Part X (10)

A PIA is a legally binding agreement between you and your creditors. You appoint a trustee to take control of your property and offer to pay your creditors part or all of your debts by installments or a lump sum.  PIA are that your name will appear on the National Personal Insolvency Index permanently.

The last option is to file for bankruptcy?

You can voluntarily lodge a petition to become bankrupt if you are unable to pay your debts when they are due and if you are present in Australia or have a residential or business connection to Australia. This is known as a voluntary bankruptcy. Otherwise, a creditor to whom you owe $5,000 or more may apply to the court to have you made bankrupt. This is known as involuntary bankruptcy.

There is no minimum or maximum amount of debt or income you need to be eligible for bankruptcy.

Consequences of bankruptcy

Your assets may be sold.

  • Some assets, including your house, can be sold by your trustee.

Your income, employment and business may be affected.

  • You may have to make contributions from your income.

  • You may longer be allowed to be a director of and/or manage a company, without the permission of a court.

You may not be released from all debts.

  • Bankruptcy does not cover all debts. As a result, you may not be released from debts such as court fines.

Your ability to travel overseas will be affected.

  • You cannot travel overseas without the written permission of the trustee.

Your name will appear on the National Personal Insolvency Index permanently.

  • In addition, credit reporting organisations may keep a record of your bankruptcy for up to five years or longer.

Your ability to obtain future credit will be affected.

  • You may find it difficult to borrow money and buy things on credit.

  • Some banks may not let you operate an account or may restrict how you can use your account.


If you have any inquiries or wish to receive further information, please contact:

John Park 

M + (61) 410 626 909 / 1300 577 502 /

Executive Lawyer / Insolvency Practitioner / Registered Migration Agent
Level 13, 2 Park Street, Sydney NSW 2000 /


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