I can't pay my bills

In Australia, when a person can't pay their bills, they may enter into bankruptcy. There may be other alternatives to bankruptcy which are discussed below.

The law of personal bankruptcy is covered by the Bankruptcy Act 1966 (Cth) . The government agency responsible for administering the Bankruptcy Act is the Australian Financial Security Authority, otherwise known as AFSA. AFSA provides lots of information about your options on its website.


An individual facing financial difficulties can make themselves bankrupt by lodging a Debtors Petition with AFSA.  Alternatively, a creditor who is owed money may make an application to the Court - a Creditors Petition - to make someone bankrupt.

When someone becomes bankrupt, a Trustee in Bankruptcy will take over and manage their property and assets and handle their liabilities. The trustee’s role is to sell the assets to raise money to pay all the creditors as much of the money owed as possible.

When a person is bankrupt, they may not be allowed to travel overseas, or to work in certain professions. Bankruptcy usually lasts for three years, after which the person is discharged from bankruptcy - although it will remain on their records for 7 years. If all the bankrupt's debts are able to be paid in full, the trustee can annul the bankruptcy.

Alternatives to bankruptcy

There may be alternatives to going bankrupt.  A person can go into a debt agreement, or a personal insolvency agreement, which involve less time and restrictions than bankruptcy.  Debtors may be able to negotiate informal repayment arrangements with their creditors. 

I also have a company

When a company can't pay its debts there is a different process to be followed. We provide some information about company insolvency here .

ARITA has worked with the Australian Financial Security Authority (AFSA) and Australian Securities and Investments Commission (ASIC) to produce guidance for people in business. This guide helps those experiencing financial distress understand what it means for them personally and any company they own or operate. The guide can be downloaded from the link below.

More information?

Talk to financial counsellor or to a qualified ARITA Professional Member about the alternative options.  Most ARITA members provide an initial meeting to discuss your circumstances, free of charge.

It is important that before using an advisor you check their qualifications. AFSA have released a short video to help you understand the risks of using an unqualified advisor.

To find out more about bankruptcy and other personal insolvency administrations, a document summarising the key features of the different options can be downloaded from the link below, or please visit the AFSA website

ARITA and AFSA provide a range of information sheets for further information.