What happens after my bankruptcy ends

6 min read

When your bankruptcy ends, most of your debts are released and you no longer need to pay them. However, there may be some debts that you still need to pay; find out more on what happens to my debts.

Your name continues to appear on the National Personal Insolvency Index (NPII) showing your bankruptcy has ended.

Can I apply for credit?

After your bankruptcy has ended, there is no restriction on applying for loans or credit. It’s up to the credit provider to decide if they will lend you money.

Your credit report will continue to show your bankruptcy for either:

2 years from when your bankruptcy ends or
5 years from the date you became bankrupt (whichever is later).

It can take time to rebuild your credit rating.

For more information regarding your credit report, contact a credit reporting agency[?]. Information about credit reporting agencies is available at ASIC's MoneySmart.

Are there any employment restrictions?

The Bankruptcy Act 1966 does not impose any restrictions on employment, either during or after bankruptcy. However some trades or professions may impose restrictions.

We recommend you contact the relevant agency or association to see if your bankruptcy will impact your employment. Common professions that bankruptcy may affect are listed under employment restrictions

Can I travel overseas?

Yes. You no longer need your trustees’ permission to travel overseas when your bankruptcy ends.

Do I need to keep in contact with my trustee?

Normally you don't. In some cases, your trustee continues to manage your bankruptcy, even after it has ended.

Your trustee may still request that you:

provide information about your financial situation
make any outstanding compulsory payments
cooperate with obtaining valuations/appraisals of property
keep your contact details up to date

What happens to my house when my bankruptcy is over?

If your trustee has claimed your house as an asset and they haven’t sold it yet, they may still be able to sell the property to recover money owed to your creditors.

Trustees will regularly recalculate equity in a property to determine if there is value in selling the property to repay creditors. If there is a significant increase in available equity, from paying down a mortgage over a long period of time or an increase in overall property value, the trustee may sell the house and realise the asset even after your bankruptcy ends.

If there is an increase in equity in the property, a trustee may attempt to sell their legal interest to any co-owner of the property or sell the property in the open market to gain a return for creditors.

There are limits that apply to the amount of time your trustee has to deal with the property. The time limit is generally six years from discharge from bankruptcy, however there may be variations depending on your circumstances. Contact your trustee for more information.

Getting help

If you need help managing your money once your bankruptcy has ended you can read more information at Budgeting and Dealing with debt.

You can get also help from a free financial counsellor by contacting the National Debt Helpline on 1800 007 007. Financial counsellors offer free, independent and confidential services to discuss your situation and help you get back on track. The National Debt Helpline website also has step by step guides and useful information on how to deal with specific types of debts, such as housing, tax debt or Centrelink debt.

For more information on financial counsellors and other support services see Where to find help.

Life after bankruptcy

Now that you are free from paying back most of your debts, you can have a fresh start with your finances.

By now you may already be on your way to saving for your future. This can go a long way towards helping you build a new life.

It is a good idea to start sticking to a budget and saving some money if you can. A good budget can help you track and manage your money.

After your bankruptcy has ended, there is no restriction on applying for loans or credit. It can take time to rebuild your credit rating, and it's up to the lender to decide whether to lend you money or not.

If you do borrow money or buy things on credit, make sure the repayments are within your budget. You can also apply for a home loan if you've been bankrupt in the past. Again, it is up to lender to decide whether to lend you money.

See Budgeting for tips and tools on how to avoid getting into a difficult financial position in the future.

Case study: Mei Ling and Matt

A fresh start after bankruptcy

Mei Ling and Matt are a married couple who rent a flat in Gosford NSW. Both worked full time until two years ago when Matt lost his job. Mei Ling now works part time earning less than $40,000 per year.

For two years they tried to survive on Mei Ling’s wage, struggling to make repayments on their overdue credit cards and loans. They ended up with unsecured debts of over $65,000.

The only assets they owned were a car worth $5,000 and general household goods (fridge, couch, bed, etc).

The pressure from their creditors became too much to handle. Debt collectors and process servers were constantly calling on them. Their electricity was turned off a few times and they stopped answering phone calls because it always seemed to be bad news. Matt’s health was also suffering, and he was treated for depression. Most nights Mei Ling would end up in tears thinking about their situation.

They finally decided to see a financial counsellor. There was no charge for this service. The financial counsellor looked through their finances and suggested they consider filing for bankruptcy.

Matt and Mei Ling went home and looked in detail at the AFSA website. They read all about their options and the consequences of bankruptcy. The AFSA website showed that they would be able to keep their car because it was worth less than the set amount. They read they could also keep their household goods. In the end, they decided that bankruptcy would be the best option for them.

After completing the Bankruptcy Form online, they submitted it to AFSA. There was no fee to apply for bankruptcy.

Bankruptcy is not the right option for everyone, but for Matt and Mei Ling it provided a way out of their debt crisis. They made a fresh financial start and regained control over their lives. This provided enormous relief to the couple. Matt was able to stop worrying about debt and find a new job.

Their bankruptcies ended 2 years ago. They continue to regularly see a financial counsellor and they keep to a budget. This keeps their finances under control, so they do not find themselves in the same position in the future.

Their new budget also allows for some savings to be put aside from their income and for the first time in 10 years, Mei Ling and Matt are planning an overseas holiday in the not-too-distant future.

*These case studies do not constitute legal or financial advice. You should consider whether the options referred to in the case studies are appropriate for you, and seek advice if necessary, before taking any action.