If a person (or debtor) owes you or your business more than $5,000 you may be able to apply to make them bankrupt.

Before making someone bankrupt

If a person is having trouble paying their debts, they may approach you as a creditor for assistance. Creditors are encouraged by consumer protection laws to take a flexible approach to payment arrangements.

Consumer protection laws are enforced by the Australian Competition & Consumer Commission (ACCC) and Australian Securities and Investments Commission (ASIC). Together they have published a guide you may find useful.

If it isn’t possible to come to an arrangement directly with a debtor, debt collection agencies may help you recover the debt. You can seek from us for advice on your rights and options available to you.

Process to make someone bankrupt

If you want to apply to make someone bankrupt, our seek our legal advice, as it can be complex.

The steps below outline the process.

1. Get a court judgment or order

2. Apply for a bankruptcy notice

3. Serve the bankruptcy notice

4. File a creditor’s petition with the court

5. The Sequestration order

If the court accepts your creditor’s petition, they may grant a Sequestration order. This makes the person bankrupt.


Filing documents

Throughout the process, you need to register certain documents.

How to appoint a trustee

You can choose to appoint a particular trustee to manage the bankruptcy.

To appoint a trustee, the trustee must complete a Consent to act as trustee form.

It’s not mandatory to appoint a trustee.  If you don’t, the court will appoint one on your behalf. This could be either a:

  • registered trustee; or
  • the Official Trustee in bankruptcy known as Australian Financial Security Authority (AFSA).

What happens once the make the person bankrupt?

  • The AFSA will notify the person of their bankruptcy.
  • AFSA will send the person a statement of affairs, which they will need to complete and return within 14 days.
  • The 3 year and 1 day bankruptcy period will not begin until ASFA accept the statement of affairs.

Once AFSA register the bankruptcy

  • The trustee will manage the bankruptcy and investigate if they can claim assets to pay creditors.
  • The individual may need to make compulsory payments, if they earn over a set amount.
  • If payments are available to creditors, the trustee will contact you (the Debtor) with further instructions.

Deceased estates

If someone passes away in debt, it may be possible to make their deceased estate bankrupt.


Need help?

If you feel this is too complicated, we can help to action this process, please contact our team at The Quinn Group or submit an online enquiry form today.