Bankruptcy is a legal financial status that can have positive and negative effects. It is strongly recommended that a debtor who is considering bankruptcy seek advice from an independent and qualified source. Bankruptcy can affect a person’s ability to get credit and employment opportunities.


Paul Latimer

Adjunct Professor, Swinburne Law School

When does bankruptcy end?

Last updated

1 June 2021

Automatic discharge

Bankruptcy usually lasts for three years after the date the bankrupt files the statement of affairs.

(Technically, bankruptcy by a debtor’s petition is three years and one day; see ‘When does the debtor become bankrupt?’ under ‘Debtor’s petition: Voluntary bankruptcy in ‘The process of going bankrupt’.)

The discharge is automatic unless the trustee files an objection to the discharge and the objection has ‘taken effect’ (see ‘Objections to discharge’, below).

Objections to discharge

Either the Official Receiver (Australian Financial Security Authority (AFSA)) or the trustee can file a written objection to discharge of the bankruptcy.

If the objection ‘takes effect’, the bankruptcy will be extended to either five or eight years, depending on the grounds for objection.

The objection takes effect as soon as it is filed with the Official Receiver (AFSA) and entered on the National Personal Insolvency Index.

The objection ceases to have effect if the trustee or Official Receiver (AFSA) withdraws the objection.

The grounds on which an objection can be lodged are detailed in section 149D of the Bankruptcy Act 1966 (Cth) (‘Bankruptcy Act’).

Extension of bankruptcy to eight years

The grounds on which the period of bankruptcy can be extended to eight years include (s 149A(2)(a)(i) Bankruptcy Act):

  • making an undervalued transaction or a transfer to defeat creditors (see ‘Property of a non-bankrupt spouse’ in ‘What happens to a bankrupt’s property?‘);
  • failing to provide details of property or income; or
  • failing to disclose a liability that existed before the date of bankruptcy.

Extension of bankruptcy to five years

The grounds of objection on which the period of bankruptcy can be extended to five years include (s 149A(2)(a)(ii) Bankruptcy Act):

  • failing to notify the trustee of a change of address; 
  • failing to disclose all debts and creditors; or
  • failing to attend an interview.

Failure to disclose particulars of debts and creditors does not have to be deliberate in order for an objection to take effect. It is important to give accurate details of all debts when filing the statement of affairs.

A bankrupt can apply to the Inspector-General (AFSA) or to the Administrative Appeals Tribunal to review a decision in relation to an objection to discharge.


A bankruptcy can be annulled if:

  • a bankrupt pays all debts in full, including interest and fees owing to the trustee;
  • the bankrupt makes an offer to pay their debts, which is accepted by creditors and approved by the court; or
  • the court is satisfied that a sequestration order ought not to have been made or a debtor’s petition ought not to have been presented (s 153B Bankruptcy Act).

The bankrupt’s obligations after discharge

In general, a discharged bankrupt is not released from, and continues to be liable to pay, the following debts:

  • debts incurred after the commencement of the bankruptcy; 
  • debts incurred by fraud; 
  • maintenance arrears (subject to a court order to the contrary); 
  • non-provable debts such as unliquidated damages, HELP debts, etc.; 
  • income contributions due during the bankruptcy; and
  • some criminal penalties, such as payments due under good behaviour bonds (ss 153A–153B Bankruptcy Act). 

The bankrupt is otherwise released from any obli­gation to pay provable debts on discharge, although secured creditors maintain the right to seize and sell any secured property.

A discharged bankrupt is still required to give assist­ance to the trustee in the realisation and distribution of property vested in the trustee (s 152 Bankruptcy Act).

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