What are my rights as a creditor in a bankruptcy?

When a person who owes you money becomes bankrupt, your rights to pursue them for payment may change.

The type of debt will determine whether you can pursue payment.

Some debts are covered in bankruptcy which means you’re unable to pursue payment. Other debts are not covered in bankruptcy, which means you may be able to pursue payment.

How do I know if someone who owes me money is bankrupt?

If you want to confirm someone is bankrupt, ask them for the trustee's details and AFSA administration number. You can then contact their trustee for details of the bankruptcy.

If the trustee is the Official Trustee (AFSA), contact us now.

If you are unable to obtain bankruptcy details, you may wish to complete a Bankruptcy Register Search.

How to be included as a creditor on a bankruptcy?

If the person who owes you money hasn’t included the debt they owe you on their bankruptcy, you can add the debt yourself.

To add your debt to an existing bankruptcy, you will need:

• AFSA administration number, and
• full name of bankrupt.

If you don't have these details, you may wish to complete a Bankruptcy Register Search.

If the trustee is the Official Trustee (AFSA) complete the online form to:

• add a debt
• update a debt
• tell us you've purchased a debt

Debts covered by bankruptcy

Most types of unsecured debts are covered by bankruptcy, including:

• credit cards
• personal loans
• utilities
• trade debts
• employee wages.

For more information on unsecured debts and whether they are provable and/or extinguished see Creditor's quick guide - bankruptcy and unsecured debts.

As a creditor, this means:

• You are not able to demand payment of the debt from the person.
• You may be eligible to receive payments from the trustee, if available.
• Most of these debts are released (or extinguished) after the bankruptcy ends.
• You will need to contact the trustee of the bankruptcy for any updates or further information.

If you're listed as a creditor, the trustee will notify you. Ensure the trustee has your correct details so they can inform you of available payments.

If you’re not sure if you are a listed creditor on the bankruptcy, contact the trustee or use our online form to add a debt to a bankruptcy.

Debts not covered by bankruptcy

• fines & penalties
• HECS & HELP debts
• debts incurred after the bankruptcy started.

As a creditor, this means:

• You may still be able to demand payment of the debt from the person.
• You are not eligible to receive payments from the trustee of the bankruptcy.
• The debt is not released (or extinguished) after the bankruptcy ends.

For more information on unsecured debts and whether they are provable and/or extinguished see Creditor's quick guide - bankruptcy and unsecured debts.

Secured debts

A secured debt is a debt tied to a particular asset, e.g. car or home loan.

Bankruptcy does not change your rights as a secured creditor.

• You are still able to pursue the person for payment of the debt.
• You may repossess and sell the secured goods if the person is unable to maintain repayments.
• If you sell the asset and it doesn’t cover the debt, the ‘shortfall’ becomes an unsecured debt covered in bankruptcy.

Find out useful information that applies if you are a creditor in a bankruptcy.

After a person enters into bankruptcy, we appoint a trustee to manage the bankrupt estate. The trustee will deal with any assets and make payments to creditors if funds become available.

Creditors can also make a person bankrupt by sequestration order. If this happens, creditors may choose a trustee to manage the bankruptcy.

Will I receive money?

It's possible that you may receive a payment from the trustee. We call these payments dividends. This may be through the sale of assets or compulsory payments from the person who is bankrupt.

If you haven't received notification of the bankruptcy, the trustee may not be aware of your debt. You must contact the trustee to add or update your debt details.

If the trustee is not aware of your debt, you may miss out on a dividend payment.

Unpaid wages

If your employer is bankrupt and owes you wages, you may be able to get financial help from the Australian Government.

For more information see Fair Entitlements Guarantee on the Department of Employment and Workplace Relations website.

If money is being paid, will I be asked to prove the debt?

If money is being paid due to a sale of assets or compulsory payments from the person who is bankrupt, the trustee will let you know. Before paying you any money, the trustee will request that you lodge a proof of debt. 

You can prove your debt by lodging a proof of debt form.

If the trustee is the Official Trustee (AFSA), find out more about how to lodge a proof of debt.

Trustee fees

From any available money, the trustee first pays fees and charges. You could be asked to approve the trustee's fees.

For more information see Approving a trustee's fees.

Meetings of creditors

Creditors have the right to request to change the trustee. They do this by voting on a resolution at a meeting of creditors. You may be asked to attend and vote at these meetings.

For more information see About meetings of creditors.

Need to claim unclaimed money?

Unclaimed money relates to funds from a bankruptcy or debt agreement where the trustee has been unable to locate the person/entity entitled to the funds.

For more information see Claiming unclaimed money.