Bankruptcy releases you from most unsecured debts. The release actually occurs when you are discharged from bankruptcy, that is at the end of your bankruptcy, which is usually after three years and one day.
However, bankruptcy does not release you from all debts and some debts remain. These include:
- Student Loan Debts; this includes all accumulated HELP, HECS and VET‑related education debts, which continue to be payable in accordance with applicable legislation.
- Child Support and Spousal Maintenance Obligations; all ongoing and outstanding liabilities arising under the Child Support (Assessment) Act 1989, the Family Law Act 1975, or related maintenance orders remain unaffected by bankruptcy.
- Fines and Statutory Penalties; Court‑imposed fines, traffic infringement penalties, and orders relating to the proceeds of crime are not provable in bankruptcy and therefore not released when you are discharged.
- Debts Incurred by Fraud; any liability arising from fraud, fraudulent misrepresentation, or fraudulent breach of trust is excluded from release under the Bankruptcy Act 1966. There may be an exception to this rule where a party has obtained a Judgement for a debt arising from fraud before bankruptcy, then the Judgement debt will likely be released once the bankruptcy ends.
- Unliquidated Damages Claims; claims for damages where liability has not been admitted or determined, and where the quantum remains unassessed prior to bankruptcy (for example, motor vehicle damage claims), are not released. Again, there may be an exception to this rule where a party has obtained a Judgement for an unliquidated debt before bankruptcy, then the Judgement debt will likely be released once the bankruptcy ends.
- Post‑Bankruptcy Debts; debts incurred on or after the date of bankruptcy are not released by a bankruptcy.
- Secured Debts; bankruptcy does not affect a secured creditor’s rights against secured property owned at the date of bankruptcy. Secured creditors may continue to enforce their security notwithstanding a bankruptcy.
Further Information Regarding Bankruptcy
It is important to get proper information and advice about the consequences of bankruptcy including any debts which will not be released by the process.
If you are seeking advice regarding the possibility of filing for bankruptcy and the consequences, please contact our Brisbane or Gold Coast office and our experienced staff will be able to assist you.
