What is bankruptcy?

If you cannot pay your debts bankruptcy is a process where you give up assets and control of your finances, either by agreement or court order, in exchange for protection from legal action from your creditors.

If you are unable to pay your debts and cannot come to suitable repayment arrangements with your creditors, you may voluntarily petition to become bankrupt.

In certain cases creditors can also apply to the court to make you bankrupt.

This is a complex issue.

There are alternatives to bankruptcy that might be more appropriate and which should be considered.

There are restrictions on the activities and responsibilities of a bankrupt person that you should understand if you are thinking about bankruptcy.

Get legal and financial advice before applying for bankruptcy.

Are all debts covered by bankruptcy?

No, not all debts are covered by bankruptcy. Get legal advice

Where can I get more information?

• Contact the Financial Counsellors Association of WA Financial Counselling Hotline on 1800 007 007 for independent financial advice

• Useful information including answers to frequently asked questions is available from the Insolvency and Trustee Service of Australia on 1300 364 785 or its website

• Go to the Federal Court of Australia website for information for litigants on bankruptcy
• See the Consumer Credit Legal Centre NSW website for factsheets on bankruptcy and debt agreements

Last reviewed: 09/02/2012