Bankruptcy is a process through which you are legally declared unable to meet your debts and are released from most of these. If you are finding it difficult to repay your debts you should seek independent legal and financial advice as soon as possible.

While bankruptcy can have a positive impact on your life and provide you with a fresh start financially it also has serious adverse effects including:

• making it difficult for you to obtain credit;
• limiting your employment options; and
• the potential loss of your home and other significant assets.

Bankruptcy should only ever be a last resort in situations where there is no alternative. You can be made bankrupt either:

• voluntarily through lodgement of a debtor’s petition; or
• involuntarily through one of your creditors lodging a creditor’s petition.

If you are declared bankrupt you are generally bankrupt for three years. During this time a trustee is appointed to look into and manage your affairs. Your bankruptcy will be permanently noted on your credit report for seven years as well as on the National Personal Insolvency Index (NPII). The NPII is a public record of bankruptcy proceedings.

You can often improve your financial situation and avoid bankruptcy by taking prompt and decisive action.

This Legal Guide on Bankruptcy Law provides general information about the implications of bankruptcy as well as the formal alternatives that are available under the Australian law. Before making important decisions it is advisable to obtain legal advice specific to your situation. LegalEagle’s™ free directory profiles all lawyers in Australia. You can use it to Find a Lawyer near you.

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Warning: Information provided through LegalEagle™ is for general guidance. It is not legal advice. Laws and procedures referred to may change and differ between states, territories and nationally. There may also be important exceptions or qualifications. Only a lawyer providing formal legal advice can assess your particular circumstances to determine how the law will apply.