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Debt agreements and bankruptcy

Information about filing for bankruptcy or entering into a debt agreement.

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It’s important to get financial and legal advice if you:

  • have been served a bankruptcy notice
  • are considering filing for bankruptcy
  • are entering into a debt agreement.

If you’re evicted, you’ll still need to pay back your home loan.

The bank or lender will usually try to sell your property to recover the amount they're owed. You’ll also be responsible for paying costs involved in selling your home.

If you still owe money after the sale, your bank or lender may try to recover the remaining amount of the loan by:

  • making a claim to sell your other assets, or
  • starting bankruptcy proceedings against you

You also have the choice of:

  • applying for a debt agreement, or
  • filing for bankruptcy yourself.

Debt agreement

A debt agreement is a formal arrangement between you and your creditors to pay back the debt over a certain period of time.

A debt agreement is not the same as a debt consolidation loan or an informal repayment plan.

Once you've signed a debt agreement:

  • it's listed on your credit report for at least 5 years
  • you're listed on the national personal insolvency index for at least 5 years
  • you’ll have to tell new credit providers about the debt agreement if you owe more than the credit limit
  • you may not be able to work in certain jobs.


Bankruptcy is an official declaration that you’re not able to pay your debts. You can file for bankruptcy yourself, or a creditor can start bankruptcy proceedings against you. In either situation, a trustee:

  • will be appointed to manage your bankruptcy
  • can sell any assets you have to help pay your debts

A bankruptcy usually lasts for 3 years and 1 day from the day it was filed. If you earn over a certain amount during that time, you may need to make compulsory payments to your trustee.

Being declared bankrupt means you won’t have to pay back most of your debts. However, you'll still be responsible for some debts, including:

  • child support and maintenance
  • government student loans
  • court imposed penalties and fines
  • debts you incur after your bankruptcy begins.

Being declared bankrupt stays on your credit report for 5 years. Additionally:

  • you're listed on the national personal insolvency index permanently
  • you can’t travel overseas without permission from your trustee
  • you can't be a director of a company without court permission
  • you may not be able to work in certain jobs.
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