Bankruptcy is when someone has a declining financial situation resulting from debts and arrears that they are unable to pay as and when they fall due. In this situation, the best solution is to file for bankruptcy.

Through the natural course of applying for bankruptcy in Australia, a trustee will be appointed who will realise all assets and resources, as well as all creditors and arrears of debts, over a 3 year period. The trustee will then liquidate the estate in order to distribute the liquidated assets among creditors, in a way that is proportionate to the debts owed by the bankrupt – i.e. the creditors with the greatest amount owed to them should receive the highest proportion of any funds recovered.

The repercussions of creditor’s claims can often result in bankruptcy, regardless of whether or not it was the individual’s choice to enter bankruptcy or if it was filed by a creditor. However, filing for bankruptcy is far from the end of the world for the person who undergoes it.

At Insolvency Advisory Accountants we can utilise mechanisms within the Bankruptcy Act that allow us to help you. We will also explain to you the distinctions in legislation with bankruptcy and the alternatives like:

  • Part IX
  • Part X
  • Bankruptcy

All are forms of applying for bankruptcy in Australia and require you to fill in a Statement of Affairs, so DON’T BE FOOLED by claims that Part IX Debt agreements are not bankruptcy: they are an act of bankruptcy and will remain on your credit file for seven years. You will also be placed on the National Personal Insolvency Index for the rest of your life under the term “bankruptcy“. This shows the world that you have been bankrupt and that the type of bankruptcy is a “Debt Agreement”.

People are notorious for entering these type of agreements without understanding the full ramifications of the agreement.

Part 9 – Debt Agreement

Insolvency Advisory Accountants can help ease you through filing for bankruptcy in Australia. Applying for bankruptcy allows you to escape a hopeless financial position and make a fresh financial start after the three-year bankruptcy period has elapsed.

A Debt Agreement under Part 9 (Part IX) of the Bankruptcy Act is designed for debtors who want to avoid full-blown bankruptcy. This Debt Agreement will allow you to repay your debt to your creditors at an affordable level over a 3 – 5 year time span. If you have a poor credit history, or want to avoid bankruptcy, then speak to one of the professional insolvency experts at Insolvency Advisory Accountants about how you might be eligible to enter into a Debt Agreement arrangement. You could possibly avoid traditional bankruptcy altogether.

Part 10 – Personal Insolvency Agreement

For those who have large debts and wish to avoid bankruptcy, a Personal Insolvency Agreement under Part 10 (Part X) of the Bankruptcy Act will allow you to repay your creditors a higher return than they would normally receive should you file for bankruptcy in Australia. Personal Insolvency Agreements, like Debt Agreements, can benefit your financial future; however, it is important that you seek expert advice in order to manage your debt according to your circumstances.

At Insolvency Advisory Accountants we understand how stressful and daunting it can be to confront personal insolvency. As such, we make it our goal to work closely with you to identify issues, risks and decisions to manage the financial impacts for your stakeholders, future business and individual financial standing.


Bankruptcy saves lives and can be the best thing for people who cannot pay their debts any longer. It will stop people from:

  • Commencing Legal Proceedings and
  • Chasing you for late payments,
as well as act to
  • Stop Debt Collectors
  • Erase Taxation Debt and
  • Stop Court Proceedings.

Through the natural course of bankruptcy, a trustee will be appointed (which can be either the Insolvency Trustee Service Australia “ITSA” or a private trustee), who will over three years realise most of your assets excluding household items and tools of trade to a certain value. You can also keep a car with a value of up to $7,200.00, or a car that has that amount of equity and may still be on finance. Most of the time, if you have a vehicle and file for bankruptcy then you can continue to pay for it as long as there is no or little equity and the payments are up to date.

The trustee will then sell whatever is available in the estate in order to distribute the assets among creditors, in a way that is proportionate to the debts owed by the bankrupt – i.e. the creditors with the greatest amount owed to them should receive the highest proportion of any funds recovered.

There are two main ways to end a bankruptcy: you can let the bankruptcy finish after three years and become discharged from bankruptcy, or you can have your bankruptcy annulled by either applying to the court to annul the bankruptcy or making an offer pursuant to Section 73 of the Bankruptcy Act (Cth). This is a composition or arrangement that you propose to your creditors through your trustee and can be anything you want; however, you might want to propose something that your creditors are likely to accept, because you need to have 75% in Value and 51% in number of the people who turn up to vote or vote by Proxy at the meeting or your proposal will fail.

If You Succeed In Getting These Numbers Then Your Bankruptcy Will Be Annulled And You Will Be Free From Debt. In This Case, Your Bankruptcy Will Be Classed As “Void Ab Initio”, Which Means In Legal Terms “Void From The Outset Or Taken To Never Have Happened”.

So What Are You Waiting For?

Simply pick up the phone or send us a message. Our experienced and friendly staff are keen to hear how they can help.