Received a
Bankruptcy Notice?

It is time to act now

What is a Bankruptcy Notice?

When an individual (the debtor) owes $10,000 or more to another person or business (the creditor), the creditor may apply to the Australian Financial Security Authority (AFSA) for a Bankruptcy Notice to be issued against the debtor.

When applying for a Bankruptcy Notice, the creditor must provide proof of the outstanding debt. The proof required from the creditor is an unpaid court judgment (unless the creditor is the Australian Taxation Office (ATO), in which case an assessment issued by the ATO is proof in itself.)

  • How long do I have to comply with a Bankruptcy Notice?

    A Bankruptcy Notice must usually be served within six months of being issued. The time can be extended by AFSA, the Federal Court or the Federal Circuit Court.

    The debtor has 21 days from the date that the Bankruptcy Notice is served to pay the outstanding debt or come to a suitable arrangement with the creditor.

  • What happens after a Bankruptcy Notice?

    If a debtor fails to comply with a Bankruptcy Notice within 21 days of being served, he/she has committed an act of bankruptcy. While there are a number of acts of bankruptcy established by the Bankruptcy Act 1966, failing to comply with a Bankruptcy Notice is the most common and easily proven act of bankruptcy.

    Once a debtor has committed an act of bankruptcy, a creditor may apply to the Federal Court or Federal Circuit Court to have the debtor declared bankrupt. This is usually referred to as a Creditor’s Petition.

  • How can I put a Bankruptcy Notice aside?

    As mentioned earlier, a Bankruptcy Notice is satisfied if the debtor pays, or comes to an arrangement to pay the debt within 21 days.

    A Bankruptcy Notice may be set aside by the Federal Court or the Federal Circuit Court if the debtor applies to the Court within 21 days of being served to have it set aside on one or more of the following grounds:

    • That the debtor has applied to set aside the judgment debt on which the Bankruptcy Notice is based;
    • That the debtor can satisfy the Court that they have a counter-claim, set-off or cross-demand equal to or exceeding the amount of the judgment debt; and/or
    • Other grounds, for example the amount claimed in the Bankruptcy Notice is overstated.

    The above is not an exhaustive list and setting aside a Bankruptcy Notice is a very complex and technical legal process. We suggest seeking professional help for this.

  • What to do after receiving a Bankruptcy Notice?

    If you receive a Bankruptcy Notice, it is crucial that you seek advice at the earliest opportunity as the effects of bankruptcy can be devastating. The team at de Jonge Read has decades of experience in dealing with bankruptcy and is well-placed to assist you or your clients through the stressful bankruptcy process.

Did You Know?

Phoenixing is another name for business restructure.

Read more about business restructures and when this can be an option for you.


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