How long does bankruptcy last?

Bankruptcy generally lasts three years and one day from the date your statement of affairs is accepted, though it can be extended to five or eight years where there has been non-cooperation or dishonesty.

How much does it cost to declare bankruptcy?

Applying for voluntary bankruptcy through AFSA does not carry an application fee. Trustees charge fees, which are typically recovered from the bankrupt estate rather than paid up front. We will explain the costs that apply to your circumstances before you commit to anything.

Is there a "90-day rule" in bankruptcy?

There is no defined "90-day rule" in the Bankruptcy Act. People asking usually mean one of the genuine time limits that apply — for example, a creditor's petition generally must be presented within six months of the "act of bankruptcy" it relies on. Because these timeframes are easy to misread, we will walk you through exactly which ones apply to you.

Does bankruptcy clear ATO tax debt?

Most tax debt is a provable, unsecured debt, so it is generally dealt with in bankruptcy along with your other provable debts. It is not a loophole to "escape" the ATO, and directors can remain personally exposed to some tax liabilities — see below.

Bankruptcy advice you can trust, from registered practitioners

If you can’t pay your debts, the hardest part is often not knowing what happens next. Getting bankruptcy advice early — before a creditor forces the decision for you — opens more options and takes a lot of the fear out of it. Bankruptcy is one path through serious financial difficulty. It is not the only one, and it is not always the right one for your situation.

At Rapsey Griffiths, you speak directly with an experienced practitioner, not a call centre. We will tell you honestly where you stand, what your realistic options are, and whether you even need to consider bankruptcy at all. Every conversation is confidential and obligation-free.

Call 1300 727 739 to talk it through today — free, confidential, no obligation.

Written and reviewed by Rapsey Griffiths’ personal insolvency practitioners, Mitch Griffiths and Chad Rapsey. [EDITOR] Registered Liquidators (ASIC) [EDITOR: confirm current ASIC registered-liquidator status] and Registered Trustees in Bankruptcy (AFSA) [EDITOR: confirm BOTH partners hold current AFSA registered-trustee status and cite registration numbers before publish. The ASIC registered-liquidator credential is a separate corporate authority and must NEVER be presented as, or allowed to imply, AFSA personal-insolvency trustee authority. If current trustee registration is not confirmed, remove the "Registered Trustees in Bankruptcy" claim and reword the page to advise-on / refer.] [Meet the team — Link: /our-team — EDITOR: confirm URL]

Reviewed by [EDITOR: reviewing practitioner + role] · Last reviewed [EDITOR: date] · Last updated [EDITOR: date]

What is bankruptcy?

Bankruptcy is a formal legal process for people who are unable to pay their debts. It is governed by the Bankruptcy Act 1966 (Cth) and overseen by the Australian Financial Security Authority (AFSA). [VERIFY] When you become bankrupt, a bankruptcy trustee is appointed to take control of your financial affairs, deal with your creditors, and manage your assets and income under the rules of the Act. [VERIFY]

It is important to be clear about what bankruptcy is not. It is not a debt-relief product, and it is not a way to make your problems disappear overnight. It is a structured legal process with real consequences and real protections — one that can release you from many unsecured debts and stop most creditor action and legal proceedings against you, while placing obligations on you in return. [VERIFY]

You can enter bankruptcy voluntarily by lodging a bankruptcy application and statement of affairs with AFSA. [VERIFY] You can also be made bankrupt by a creditor who takes court action after issuing a bankruptcy notice, generally where you owe money above a set threshold. [VERIFY] Either way, understanding the process before you act — rather than after — puts you in a far stronger position.

Not sure where you stand? Call 1300 727 739 for a plain-English answer.

When bankruptcy is — and isn’t — the right answer

Sometimes bankruptcy genuinely is the best decision. If you have little in the way of assets, your income is modest, and your debts are large and unsecured, bankruptcy can give you a defined path forward and a clear end date rather than years of creditor pressure with no resolution. [VERIFY]

For other people, it is the wrong call. If you have significant assets you want to protect, a higher income, or debts that could be settled another way, a formal alternative such as a personal insolvency agreement or a debt agreement may suit you far better. And for some, the right first step is simply to get independent advice, understand the position, and negotiate with creditors — not to enter any formal option at all.

We say this plainly because most advertising in this space does not. Anyone promising to “wipe” or “clear” your debt is selling you something, not advising you. Honest bankruptcy help starts with your actual circumstances — your income, your assets, the size and type of your debts, and whether you run a business — and works out what genuinely fits. If bankruptcy isn’t right for you, we will tell you.

Your options if you can’t pay your debts

When you owe money you can’t repay, there is rarely just one road. Australian law provides a range of formal and informal options, and the right one depends on your income, your assets, and the debts involved. Here is the full landscape at a glance.

Informal debt restructuring — a negotiated arrangement with your creditors to repay, reduce, or reschedule what you owe, without entering a formal insolvency process. Often the best first option where income is stable.
Personal insolvency agreement (PIA / Part X) — a formal, legally binding agreement to pay creditors an agreed amount (as a lump sum or over time) instead of going bankrupt. Suited to more complex situations or higher-income earners; it has no set income or debt limits. [VERIFY]
Debt agreement (Part IX) — a separate, lower-income formal option under the Act, where you pay an agreed portion of your debts over a set period. It is a legally binding arrangement with creditors and appears on your credit report for years. [VERIFY]
Bankruptcy — the formal process described above, generally the option of last resort once others have been ruled out.
Temporary debt protection — a short-term measure that gives you 21 days of protection from enforcement and debt collectors while you get advice and decide what to do. [VERIFY]

For independent, non-commercial background on these paths, the government’s Moneysmart service explains bankruptcy and debt agreements in plain terms.

[Image 1: Simple decision-flow graphic — “which option might fit me” (informal restructuring → PIA → debt agreement → bankruptcy) — Alt text: “Choosing between bankruptcy and its alternatives in Australia”]

Your debt options compared

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Every statutory figure in this table must be confirmed by a qualified reviewer before publishing. [VERIFY]

This is the piece most providers skip. We built it so you can see the real trade-offs side by side — because choosing between these paths is exactly where good advice matters most.

Want help working out which column is you? Call 1300 727 739.

Alternatives to bankruptcy

For a lot of people who come to us worried about going bankrupt, an alternative turns out to be the better answer. The main alternatives to bankruptcy are informal debt restructuring, a personal insolvency agreement, and a debt agreement — each with different eligibility, cost, and consequences.

Which one fits depends on your income, your assets, the total you owe, and whether creditors are likely to agree. A personal insolvency agreement, for example, needs creditor approval by a special resolution — a majority in number and at least 75% in value of the creditors who vote — and is often used where affairs are more complex. [VERIFY] A debt agreement is aimed at lower-income earners with smaller, unsecured debts. [VERIFY]

We go through each of these in detail — including when each one is and isn’t a good idea — on our dedicated page.

Read more: [Alternatives to bankruptcy — Link: /alternatives-to-bankruptcy — EDITOR: confirm URL] and our [debt agreement guide — Link: /debt-agreement — EDITOR: confirm URL].

What you lose (and keep): the consequences of bankruptcy

The most common questions we hear are about what you stand to lose. Here are the real consequences of bankruptcy, plainly. [VERIFY] throughout.

Your assets — some assets vest in the bankruptcy trustee, who may sell them to repay creditors. But protected-asset exceptions apply — ordinary household goods, tools of trade up to a limit, and certain vehicles up to a threshold are generally protected. [VERIFY]
The family home — a house with equity can be affected, as the trustee may have the power to realise your interest in it. This is one of the most important things to get advice on before acting. [VERIFY]
Superannuation — money held in a regulated super fund is generally protected in bankruptcy, with some exceptions (for example, recent or unusual contributions). [VERIFY]
Your income — bankruptcy doesn’t take your wages, but if your after-tax income exceeds a set threshold you may have to make compulsory contributions from the excess. [VERIFY]
Your credit — your bankruptcy is recorded on the National Personal Insolvency Index (NPII) permanently, and stays on your credit report for around five years, which affects borrowing money in future. [VERIFY]
Travel and work — you generally need your trustee’s permission to travel overseas, and while you are bankrupt you cannot manage a company or act as a director. Some occupations and licences may also be affected. [VERIFY]

Some obligations survive bankruptcy — for instance, court fines, child support, and certain other debts are not released. Family law property settlements can also interact with bankruptcy in complex ways. [VERIFY] This is why advice tailored to your situation matters so much.

Common questions: cost, timing and tax debt

How long does bankruptcy last? Bankruptcy generally lasts three years and one day from the date your statement of affairs is accepted, though it can be extended to five or eight years where there has been non-cooperation or dishonesty. [VERIFY]
How much does it cost to declare bankruptcy? Applying for voluntary bankruptcy through AFSA does not carry an application fee. [VERIFY] Trustees charge fees, which are typically recovered from the bankrupt estate rather than paid up front. [VERIFY] We will explain the costs that apply to your circumstances before you commit to anything.
Is there a “90-day rule” in bankruptcy? There is no defined “90-day rule” in the Bankruptcy Act. People asking usually mean one of the genuine time limits that apply — for example, a creditor’s petition generally must be presented within six months of the “act of bankruptcy” it relies on. [VERIFY] Because these timeframes are easy to misread, we will walk you through exactly which ones apply to you.
Does bankruptcy clear ATO tax debt? Most tax debt is a provable, unsecured debt, so it is generally dealt with in bankruptcy along with your other provable debts. [VERIFY] It is not a loophole to “escape” the ATO, and directors can remain personally exposed to some tax liabilities — see below.

The director’s crossover: when business debt becomes personal

Company trouble and personal trouble are often the same problem wearing two hats. If your business is failing and you have signed personal guarantees, or the ATO has issued a Director Penalty Notice, the company’s debt can land squarely on you personally. [EDITOR: confirm RG's DPN/personal-guarantee positioning matches current service scope.]

This is where Rapsey Griffiths is different. We handle both corporate and personal insolvency, so a director whose company failure has become a personal-liability problem deals with one team — not a referral to somebody else halfway through. We can look at the company position and your personal exposure together and advise on the whole picture.

If you are a director under pressure, don’t wait for the notices to escalate. Call 1300 727 739.

How Rapsey Griffiths helps

Rapsey Griffiths is a Newcastle-based insolvency and advisory firm led by two senior practitioners, Mitch Griffiths and Chad Rapsey. [EDITOR] We provide personal insolvency advice across Newcastle, the Hunter, and the Central Coast, and act nationally where needed. [EDITOR: confirm service area.]

As registered bankruptcy trustees, we administer personal bankruptcies and personal insolvency agreements ourselves — you are not being passed to a third party. [EDITOR: confirm both partners hold current AFSA registered-trustee status and cite registration numbers before publish. If not confirmed, this page must instead say RG advises on personal insolvency and refers trustee appointments — do not imply trustee authority from the firm's ASIC registered-liquidator (corporate) role, which is a separate credential.]

We have acted on personal insolvency matters across Newcastle, the Hunter, and the Central Coast for [EDITOR: years acting / number of personal-insolvency appointments handled]. [EDITOR: add one compliant, de-identified client outcome — e.g. a sole trader who avoided bankruptcy through a personal insolvency agreement — with no identifying details.]

[Image 2: Partner headshots of Mitch Griffiths and Chad Rapsey — Alt text: “Mitch Griffiths and Chad Rapsey, registered insolvency practitioners at Rapsey Griffiths”]

What you get from us:

Partner-led advice from named, registered practitioners [EDITOR] — not anonymous “specialists” on a script.
Honest guidance that starts with your situation, including telling you when a formal option is wrong for you.
Confidential, obligation-free conversations, so you can understand your options before deciding anything.
ASIC and AFSA-compliant advice from a firm that is a member of ARITA. [EDITOR: confirm ARITA membership.]

We also work alongside free supports. If your situation would be better served by a free financial counsellor, or you need independent legal advice on a family law or property issue, we will tell you. The National Debt Helpline (1800 007 007) offers free financial counselling in every state and territory, and financial counsellors provide free and independent services. [VERIFY]

Frequently asked questions

Do I have to go bankrupt if I can’t pay my debts?

No. Bankruptcy is one option among several. Depending on your income, assets, and debts, an informal arrangement, a personal insolvency agreement, or a debt agreement may suit you better. Getting advice first is the way to find out. [VERIFY]

Will I lose my house if I go bankrupt?

Not automatically, but a home with equity can be affected because the trustee may realise your interest in it. This is one of the most important things to get advice on before you act. [VERIFY]

Is my superannuation safe in bankruptcy?

Money held in a regulated superannuation fund is generally protected, with some exceptions such as recent or unusual contributions. [VERIFY]

Will my employer find out, and can I still work?

Your bankruptcy is recorded on the public National Personal Insolvency Index. Most jobs are unaffected, but you cannot manage a company while bankrupt, and some licensed occupations have restrictions. [VERIFY]

Does bankruptcy stop debt collectors?

Once you are bankrupt, most unsecured creditors and debt collectors must stop enforcement action and legal proceedings for those provable debts. [VERIFY]

How do I apply for bankruptcy?

You apply voluntarily by completing a bankruptcy application and statement of affairs and lodging them with AFSA. [VERIFY] We can talk you through whether that is the right step before you complete any bankruptcy form.

Talk to a registered practitioner today

If you are considering bankruptcy — or you just want to understand your options — the best first move is a confidential conversation with someone who will be straight with you. There is no cost and no obligation, and everything you tell us stays private.

Call 1300 727 739 or send an enquiry, and speak with a registered practitioner about your situation.

Last reviewed: [EDITOR: insert date]. Bankruptcy in Australia is governed by the Bankruptcy Act 1966 and administered by the Australian Financial Security Authority (AFSA). This page is general information, not personal financial or legal advice. [VERIFY] Rapsey Griffiths registrations and ARITA membership: [EDITOR].

Key takeaways

Bankruptcy is a formal legal process under the Bankruptcy Act 1966, administered through a trustee under AFSA oversight — not a debt-relief product that makes your problems disappear. Getting advice early, before a creditor forces the decision, opens more options and takes the fear out of it.
It is rarely the only path. Informal debt restructuring, a personal insolvency agreement (Part X), a debt agreement (Part IX) and temporary debt protection can each suit different situations depending on your income, assets and debts.
The real consequences matter: some assets vest in the trustee, a family home with equity can be affected, superannuation is generally protected, and your bankruptcy is recorded on the NPII permanently and on your credit file for around five years.
Company directors can be personally exposed through personal guarantees or a Director Penalty Notice. Rapsey Griffiths handles both corporate and personal insolvency, so it is one team, not a referral.
You speak directly with an experienced, registered practitioner — Mitch Griffiths or Chad Rapsey — in a confidential, obligation-free conversation. If bankruptcy isn’t right for you, they will tell you. Call 1300 727 739.