Bankruptcy
The Bankruptcy Act 1966 is a Commonwealth (Federal) law that applies uniformly across all Australian states and territories, including Victoria, New South Wales, Queensland, Western Australia, South Australia, Tasmania, the ACT, and the Northern Territory. There are no separate bankruptcy acts for individual states.
Key Aspects of Australian Bankruptcy Law
Applicability: The Bankruptcy Act 1966 applies to individuals who cannot pay their debts, not to companies (which are covered by corporate insolvency laws).
Administration: The Australian Financial Security Authority (AFSA) oversees the system, with bankruptcy matters generally heard in the Federal Circuit and Family Court of Australia (FCFCOA) or the Federal Court of Australia.
Bankruptcy Threshold: As of January 1, 2021, the debt threshold required for a creditor to petition for a debtor’s bankruptcy is $10,000.
Duration: Bankruptcy usually lasts for three years and one day from the date the Statement of Affairs is accepted, unless an objection is lodged.
Alternatives: The Act also provides alternatives to bankruptcy, such as debt agreements (for lower income/debt levels) or personal insolvency agreements (a more formal arrangement with creditors).
Uniform Application Across States
Victoria (VIC): Bankruptcy matters are handled by the Federal Circuit and Family Court of Australia, Melbourne Registry.
Other States (NSW, QLD, WA, etc.): The same federal legislation and court system apply.
Consequences of Bankruptcy
Property: After-acquired property (property acquired during bankruptcy) generally vests in the trustee to be distributed among creditors.
Restrictions: Bankrupts have restrictions placed on them, including limits on travel, obtaining credit, and managing businesses.
Discovery: Bankrupts must disclose all property and financial information to their trustee.