How to file bankruptcy Chapter 7

Q: What can you put in a Chapter 7?

Chapter 7 bankruptcy erases or discharges credit card balances, medical bills, past-due rent payments, payday loans, overdue cellphone and utility bills, car loan balances, and even home mortgages in as little as four months.

To apply for bankruptcy, you need to complete and submit a Bankruptcy Form.

Índice Show

You will need identity documents
Unable to create an online account?
Nominate a registered trustee (optional)
Already created an Online Services account?
What is Chapter 7 and how does it work?
What can you put in a Chapter 7?
What debts are not covered by bankruptcy?
What happens when a person declares bankruptcy?

It may take you approx. 30 to 60 mins to apply.

Bankruptcy is a legal process where you're declared unable to pay your debts. It can release you from most debts, provide relief and allow you to make a fresh start.

However, consequences of bankruptcy are serious and a bankruptcy can’t be cancelled if you change your mind. We recommend contacting a financial counsellor before you apply for bankruptcy. For more information, see: Before entering bankruptcy.

When completing a bankruptcy form you will need to give details of:

- your income
- your assets (things you own)
- your debts
- any business, company and trust involvement.

You will need things such as pay slips, Centrelink statements, bank statements, account numbers and details of any court cases you are involved in.

You will need identity documents

You can apply for bankruptcy online by creating an Online Services account. To create an Online Service account, you’ll need to confirm your identity.

You will need 2 forms of ID documents to do this. Common documents you can use include:

- Medicare card
- Australian Driver’s license
- Birth Certificate
- Australian Passport

For other forms of ID you can use please see: How to prove your identity

You can apply for bankruptcy online by creating an Online Services account.

You can either create a Digital Identity or an AFSA account.

Digital Identity is a simple, safe and secure way to prove who you are. Once set up, you can reuse it with other services whenever you need it. Learn more about Digital Identity.
An AFSA account is for use on our website only. AFSA uses the Australian Government Identity Matching Services to help you prove who you are. Learn more about IDMatch.

If you need help, see Get help with creating an Online Services account.

Unable to create an online account?

If you are completing the form on behalf of someone else or if online lodgement is not an option for you, you can lodge your application offline. To do this, contact us for a Bankruptcy Form and return it via post

Nominate a registered trustee (optional)

If you’ve arranged for a registered trustee to manage your bankruptcy, ask your trustee to complete a Consent to Act Declaration and submit this at the same time as your Bankruptcy Form online. This is optional. If you don't do this, AFSA will nominate a trustee for you.

If we accept your bankruptcy application, we'll send you and your creditors[?] confirmation in writing. This confirmation contains your AFSA administration number[?]. Your creditors may ask for this.

If we don't accept your application, we notify you in writing with the reason why.

If you submitted your Bankruptcy Form online you can log back into your account to see the status of your application and, once accepted, your AFSA administration number.

Already created an Online Services account?

The new AFSA website is in beta.

You can apply for bankruptcy if you meet these 2 requirements:

you're unable to pay your debts when they are due (insolvent) and
you're present in Australia or have a residential or business connection to Australia.

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

There is no fee to apply for bankruptcy.

If you're currently in a debt agreement[?] and want to apply for bankruptcy, contact your administrator. You must terminate your debt agreement first before applying.

You can check your eligibility with our easy to use tool.

Although bankruptcy can provide relief if you are unable to repay your debts, there are consequences which may affect you. Being aware of these consequences can help you decide if this is the best option for you.

Seek help

To help understand the consequences of bankruptcy and how they may impact you, you can speak to a financial counsellor. Financial counsellors offer free, independent and confidential services that will help you consider your options for dealing with unmanageable debt. To speak with a free financial counsellor contact the National Debt Helpline on 1800 007 007.

For more information on financial counsellors and other support services see Where to find help.

Before you apply for bankruptcy, you can choose a registered trustee to administer your bankrupt estate. If you do not choose a registered trustee AFSA may seek the consent of a registered trustee to manage your bankruptcy. If a registered trustee does not provide their consent to act then your estate will initially be administered by the Official Trustee (AFSA).

If you earn over a set amount, you may need to make compulsory payments[?] to your trustee. There may also be some restrictions on your employment and running a business.

For more information see: Income and employment

Most unsecured debts are covered in bankruptcy - this means you no longer have to repay these debts. There are some exceptions.

For more information see: What happens to my debts

You must request permission from your trustee to travel overseas. It's an offence to travel overseas without consent in writing. Your trustee may ask for further details to consider your request.

The National Personal Insolvency Index is a searchable public register listing insolvency proceedings in Australia.

For more information see: Who will know I’m bankrupt?

If you apply for credit over a set amount, you must inform the credit provider of your bankruptcy. Credit reporting agencies[?] keep a record of your bankruptcy for:

5 years from the date you became bankrupt or
2 years from when your bankruptcy ends, whichever is later.

For more information see: Who will know I'm bankrupt?

You are able to keep:

ordinary household goods
tools up to a set amount used to earn an income and
vehicle(s) with a value up to a set amount.

Your trustee can sell other assets including your house and property. You must not dispose of any property belonging to the trustee. You must declare any assets you have when you apply for bankruptcy and any you receive during bankruptcy.

For more information about which assets a trustee can claim see: Assets that can be taken or sold

If you're involved in any legal action, you need to inform your trustee. If you have a pending court case, you should contact the court to confirm whether you must still attend. Contact the Commonwealth courts.

Your bankruptcy period starts from the day we accept your bankruptcy application. If a creditor makes you bankrupt, the bankruptcy period starts from the date you file a statement of affairs that we accept. In some cases, your trustee can lodge an objection[?] to extend the bankruptcy for up to eight years.

For more information see When will my bankruptcy end?

What is Chapter 7 and how does it work?

Background. A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code.

What can you put in a Chapter 7?

Chapter 7 bankruptcy erases or "discharges" credit card balances, medical bills, past-due rent payments, payday loans, overdue cellphone and utility bills, car loan balances, and even home mortgages in as little as four months.

What debts are not covered by bankruptcy?

Bankruptcy does not release a person from the following debts: debts incurred by the bankrupt since the bankruptcy. debts arising from court fines or breaching bonds. debts incurred by means of fraud or fraudulent breach of trust.

What happens when a person declares bankruptcy?

When you declare bankruptcy, you will file a petition in federal court. Once your petition for bankruptcy is filed, your creditors will be informed and must stop pursuing any debt you owe. The court will then request certain information from you, including: The total amount of debt you owe.