Ending a bankruptcy

Ending a bankruptcy

There are two means by which a bankruptcy can be ended - discharge (this occurs when the period of bankruptcy has been served and is the usual means of ending a bankruptcy) or annulment.

Automatic discharge

Pursuant to s 149 of the Bankruptcy Act 1966 (Cth), most bankrupts will be discharged automatically 3 years and 1 day after either

their debtor's petition is accepted, or
an accepted statement of affairs has been filed.

After discharge, the bankrupt continues to be liable for fines or debts incurred by fraud, and for debts under a maintenance order, although the court has the power to release a bankrupt from liability to pay child support arrears [s 153].

Objections to discharge

Objections may be lodged by the trustee on a number of grounds which will extend the period of bankruptcy to a total of 5 or 8 years [Bankruptcy Act 1966 (Cth) ss 149A-D].

Where the ground for lodging an objection relates to uncooperative conduct by the bankrupt (one of the ‘special grounds’ listed in the Act), the trustee will not have to provide a reason for lodging an objection [ss 149C, 149D].

A bankruptcy will be extended to 5 years if the bankrupt failed to:

disclose a debt existing at the date of bankruptcy
advise the trustee of any change of name, address and telephone number [s 80]
sign a document at the trustee's request
attend a meeting of creditors without reasonable excuse or approval of the trustee
attend an interview or examination without reasonable explanation
disclose an interest in property.

A bankruptcy will be extended to 8 years if the bankrupt:

left Australia and did not return
failed to return to Australia despite being asked to do so by the trustee
unlawfully continued to manage a corporation
obtained goods, services or money to a value of $6,893 or more (as at March 2024, indexed quarterly) without disclosing the bankruptcy [ss 269, 304A]
disobeyed a request from the trustee for information about property or income
did not disclose a source of income in their statement of affairs or during the bankruptcy [ss 6A(1),139U]
failed to pay contributions to the trustee or explain how money was spent
failed to explain adequately the disposal of property
failed to explain the purpose for which money was spent.

Annulment

If all the debts are paid, the trustee will annul the bankruptcy. Annulment occurs when the last payment is made (including interest on interest-bearing debts) [Bankruptcy Act 1966 (Cth) s 153A].

The court can also annul the bankruptcy if satisfied that

a sequestration order should not have been made, or
a debtor's petition should not have been presented by the debtor or accepted by the Official Receiver [s 153B].

Legal advice should be sought from a private lawyer about options for annulment of bankruptcy.

Ending a bankruptcy : Last Revised: Fri Jul 8th 2011
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.

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