When an individual enters into voluntary bankruptcy, they generally remain bankrupt for a period of three (3) years. Under the provisions of the Bankruptcy Act ("the Act"), a person is bankrupt for a period of three years (3) and one day (that's a minimum period of 1,096 days - but who is counting!) from when their Statement of Affairs ("SOA") is filed and accepted by AFSA. The SOA is a questionnaire style document that sets out information about the bankrupt's financial affairs and includes details of all assets and liabilities owned by the bankrupt.

It should be remembered when an individual is declared bankrupt involuntarily (ie by the Court) and does not file their SOA with AFSA for some period of time (for example say 6 months), the period of three (3) years does not commence until such time as it is filed and thus has the effect of increasing the bankruptcy period.

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Importantly, this standard period of three (3) years can be extended in certain circumstances. Section 149D of the Act sets out twenty two (22) grounds when this period can be extended. These grounds include various situations where the bankrupt has failed to comply with his or her obligations under the Act. Based on my experience as a Bankruptcy Trustee, the ten (10) most common grounds, (not in any order) for extending a bankruptcy are as follows:

  1. The bankrupt continued to manage a corporation;

  2. The bankrupt incurred credit over the statutory limit without disclosing their status as a bankrupt;

  3. The bankrupt failed to provide the Trustee information on their property or income;

  4. The bankrupt intentionally provided false or misleading information to their Trustee;

  5. The bankrupt failed to pay income contributions that were due to be paid to their Trustee;

  6. The bankrupt failed to disclose a liability to the Trustee;

  7. The bankrupt failed to provide their passport to their Trustee;

  8. The bankrupt failed to attend a meeting or interview with the Trustee;

  9. The bankrupt failed whether intentionally or not, to disclose to the Trustee an interest in property; and

  10. The bankrupt has left Australia and has not returned.


In order for the extension of the bankruptcy to take effect, the Trustee must prepare a written objection to discharge and file same with the Official Receiver. The objection is then entered onto the National Personal Insolvency Index ("NPII"). Depending on which of the grounds is relied upon for the objection the bankruptcy is extended to a period of either five (5) years or eight (8) years.

The ability to extend a bankruptcy is an important power available to a Trustee and is one that can aid in ensuring there is a maximum chance of recoveries for creditors. It also serves to emphasis that it is critical that individuals considering bankruptcy (or those where they are made bankrupt involuntarily) understand they have responsibilities once the bankruptcy commences and continued communication with their Bankruptcy Trustee will more often than not avoid many of the above grounds needing to be considered.

The Firm has four (4) Bankruptcy Trustees and are all significantly experienced in advising on personal insolvency options and their impacts.