You may have more options than you realise. We’ll help you understand how bankruptcy works and what the process may involve, without pressure or judgement.
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If you're unemployed or receiving a pension, you may have questions about how bankruptcy works and what it could mean for your circumstances. Here are answers to some of the questions we hear most often.
Yes you can, If you receive an aged pension, disability support pension, parenting payment, or another form of government support, debt can feel especially overwhelming. Our role is to explain how the bankruptcy process works, what it may involve, and answer common questions so you can make your own informed decision.
The short answer to this is no. You are still able to apply for or continue to receive your pension through Centrelink as a bankrupt. If you are already receiving these benefits they will continue as they currently are and if you are yet to apply for a pension, you simply apply a usual. You are also able to continue to receive other benefits such as family Allowance, rent assistance, a health care card and most other government benefits if you qualify.
Bankruptcy is a relatively simple process, however there are some requirements placed upon you for the thee years that you are bankrupt.
These include:
- Completing an annual report. You are required to provide a completed annual report to your trustee. This report outlined how much income you have earned over the year and will determine if there are any contributions to be made to the trustee.
- Payment of contributions. If you earn over what is called the “Threshold Limit” for your income, you will be required to pay some of this money to your trustee. The current income threshold is $74,064 (AFTER TAX). This threshold increases if you have dependents so be sure to contact us for more details.
- Overseas Travel. Many people who are enquiring about bankruptcy are under the false impression that they are unable to travel overseas if they go bankrupt. This is not the case. You can apply to travel overseas and once you have the permission of your Trustee, you can go. It is a simple and easy process.
- Other costs. In most cases there are no other costs associated with your bankruptcy unless you earn above the threshold limit and need to pay some money to your trustee. If, for some reason, there are other costs your trustee will make them known to you but this is seldom the case.
The short answer to this is yes, you are normally able to continue to receive other benefits such as family Allowance, rent assistance, a health care card and most other government benefits if you qualify.
You can keep a vehicle up to the value of $8000. (Be sure to ask us to find the “Actual” value of your vehicle. The value is often very different to what you think.)
If your vehicle is worth more than $8000.00 and there is no finance on it, you may still be able to keep it by using one of these options
Option 1: you may be able to speak with your Bankruptcy Trustee (the person who looks after you during your bankruptcy) and ask them if you can pay off the difference over the term of your bankruptcy. Here’s an example. Let’s say that your vehicle is worth $15000 and you would like to keep it. You could speak with the trustee and let them know that you realise you can only keep a car up to the value of $8000 but that you would like to keep the car and pay off the difference over the next year or two. Often you will find the Trustee very helpful and accommodating and will be more than happy to work with you on this.(We are happy to negotiate this for you)
Option 2: You could simply hand the vehicle to your trustee. He can then arrange for it to be sold and once it is sold your trustee will give you back $8,000 from the sale of the vehicle and pay the rest of the money to your creditors. (People you owed money to.) You can then use this $8,000 to go and buy another vehicle.
What if my vehicle is financedIf your vehicle is under secured finance the situation is quite different. Here are the usual scenarios that exist regarding financed vehicles and Bankruptcy.
Scenario 1: Often you will find that you owe more on the vehicle than what it is worth. If this is the case and your finance company agree to let you keep the loan, then you can keep the vehicle so long as you continue to pay the loan. (That’s right, you can choose to keep a loan even if you go bankrupt!)
Scenario 2: If your vehicle is worth up to $8000 more than you have left on your loan and your finance company agree to let you keep the loan, then you can keep it. For example, if you have a vehicle worth $20,000 and your loan is only $12,000 you can keep the vehicle as you only own $8000 worth of the equity in the vehicle. If you are unsure, ask us.
Scenario 3: If the vehicle is worth $8000 or more than the loan, then you will again need to work something out with your Trustee to pay off the difference. (We can negotiate this for you if you want us to.)
Yes. However there may be circumstances where Landlords ask you to let them know if you are, or if you have become bankrupt. Each situation is different so please read through your rental agreement and find out what the requirements are.
Your Centrelink debt will be taken care of as part of your Bankruptcy. However, if it is has been found that your Centrelink debt was fraudulent and the courts have found you guilty and charged you with fraud or dishonesty, then this Centrelink debt will not be covered as part of bankruptcy and you will be required to pay it back. For more clarification on this please contact us.
While you are Bankrupt you are able to run a business as a sole trader (there are some requirements and restrictions to this, so call us to find out the details). However you are not able to be the Director of a Company while you are bankrupt, unless you are given approval by the courts. So in short, yes you can run a business as a bankrupt. It is not the Governments intention to “kill off your ambitions and put you into hibernation” for 3 years, they simply need to be sure that you meet your obligations as a bankrupt.
Bankruptcy doesn’t stop you from working and normally your employer does not need to know, nor will they be told that you are bankrupt. However there are some restrictions to be aware of:Some professional or licencing bodies impose restrictions in some trades or professions. Contact them directly to ask if restrictions apply.There may be limitations to operating as a sole trader.You can’t manage a trust account e.g. as a solicitor or accountant.You can’t be a director of a company or manage a company unless you have the permission of the court.You may not be able to hold certain public positions (e.g. senator or member of parliament).Be sure to contact us if you need more information on the job you are applying for.
There are lots of questions to consider, let us help you find some answers.
For more than 16 years, we’ve helped thousands of Australians who are unemployed, receiving Centrelink payments, or living on a government pension understand how the bankruptcy process works. If you rely on unemployment benefits or a pension, it’s natural to have specific questions about how bankruptcy may affect your income, benefits, housing, car, superannuation, and day-to-day life.When debts are building up and your income is limited, it can feel like every payment only keeps things going for another month without actually reducing what you owe. That pressure can be exhausting. Our role is to explain the bankruptcy process clearly, answer your questions, and guide you through the steps involved so you can make your own informed decision without pressure or judgement.
If you receive an aged pension, disability support pension, parenting payment, or another form of government support, debt can feel especially overwhelming.Our role is to explain how the bankruptcy process works, what it may involve, and answer common questions so you can make your own informed decision.
Many people reach retirement carrying debt from earlier years. We explain how bankruptcy works, common concerns, and what information may be helpful before making your own decision.
Financial pressure can feel even heavier when health challenges are already present. We provide information about the bankruptcy process and help explain the steps involved.
Raising a family while managing debt is difficult. We help explain the process clearly and answer common questions so you can move forward with confidence.
Losing work or relying on a limited income can make debt feel impossible to manage. When money is tight, even small repayments can feel overwhelming, especially when most of the payment seems to go towards interest rather than reducing what you owe. If you are unemployed and dealing with large debts, it is natural to feel stressed, stuck, or unsure about what to do next. Many people in this situation avoid phone calls, ignore letters, or feel anxious about debt collectors because they simply do not know what their options are. You are not alone. A significant number of people who contact us about bankruptcy are unemployed or receiving government support. Many were managing their debts while working, but once their income changed, the repayments became impossible to keep up with. Our role is to explain how the bankruptcy process works, help you understand what may happen, and guide you through the steps involved if you decide to move forward. We provide clear information, practical guidance, and support so you can make your own informed decision without pressure or judgement.
