Bankruptcy and

Personal Insolvency


Bankruptcy and Personal Insolvency in Australia

A lot of the people who approach MyBudget are so deep in debt they can see no way out except personal insolvency or bankruptcy. They’re usually so stressed and worried they can’t imagine any other options. All they know is that they want the worry to end. They want the calls and letters from debt collectors to stop. They want to sleep at night. They want to start enjoying life again.

We recognise that bankruptcy and formal debt agreements do have their place for some people. However, we also understand the implications of going bankrupt. There are significant consequences which can include five years of limited or costly access to sources of credit. It is a serious decision and should not be taken lightly.

Understanding Insolvency

Personal Insolvency
A legal term that describes when a person is unable to pay their debts. Bankruptcy and formal debt agreements are acts of insolvency which have serious consequences.
A legal process that releases you from your debts. Appears on your credit file for five years and remains on the National Personal Insolvency Index (NPII) forever.
Formal Debt Agreement
A legally binding contract that is an act of bankruptcy and appears on your credit file for five years.

It's all about you

Depending on your unique circumstances, your values and desires for the future, as a client we may be able to assist you to pay your way out of debt without further compromising your credit rating or needing new loans. Alternatively, should you choose to do so, we can explore insolvency options.

We have a 97% success rate in helping our clients avoid bankruptcy.


Most of our clients say that they felt relieved.

Our aim is to help you fix your money problems so that you can start enjoying life again.

Most of our clients say that they felt relief, knowing that budgeting experts were working with them to get their finances back on track.


A person is considered insolvent when they do not have enough money to service their debts. In Australia, personal insolvency is overseen by the federal government through the Australian Financial Security Authority (AFSA, formally known as Insolvency and Trustee Service Australia – ITSA). AFSA registers bankruptcies and Part IX Debt Agreements.

Bankruptcy is a legal process that releases a person from their debts.

When you become bankrupt, your debts are wiped clean and, in most cases, there are no repayments to make. That may sound attractive, but it comes with consequences.

When you file for bankruptcy, an appointed trustee has the power to value and sell your assets to compensate your creditors. In some instances, the trustee can also command part of your salary. Your name will be listed on the National Personal Insolvency Index permanently and your insolvent status will appear on your credit file for five years. This will limit your access to credit during that period of time. Even after the bankruptcy has ended, you may find that your ability to borrow is limited. Becoming bankrupt can also restrict a person from working in certain professions, running businesses, and travelling overseas.

When it comes to money trouble, every situation is different.

The only way to properly assess your circumstances is to analyse your finances in detail and explore your options.

MyBudget offers a free, no-obligation debt consultation to members of the public. We will closely examine your debts, bills and other expenses, and carefully take into account your concerns, goals and priorities.

This consultation is free and you are under no obligation sign up as a MyBudget client. By the end of the consultation, you will have a comprehensive, customised budget plan that demonstrates how we may help you to be able to afford to repay your debts through negotiation and good money management in the form of a workable budget.

We specialise in helping people recover from debt stress. We’re here to answer all of your questions and help you design a customised strategy that achieves your specific goals. In a relaxed and confidential setting, one of our budgeting experts will show you how a debt agreement could affect your financial outlook. However, if you do decide that a formal debt agreement is the right solution for you, MyBudget can handle everything and take care of the paperwork. Some functions and staff of MyBudget also trade under the company name MyDebtSolution Pty Ltd, which is a registered debt agreement administrator with the Australian Financial Security Authority (AFSA), and which assists MyBudget clients who are applying for formal debt agreements.

How does a formal debt agreement differ from bankruptcy?

A formal debt agreement, also known as a “Part 9 Debt Agreement”, differs from bankruptcy because it allows you to offer a reduced settlement to your creditors in the form of a repayment schedule.

A formal debt agreement would allow you to potentially keep your higher valued assets, such as your house. The consequences of a formal debt agreement, however, are not dissimilar to bankruptcy. In fact, simply applying for a Part 9 Debt Agreement is considered an act of insolvency. Like bankruptcy, a formal debt agreement will appear on your credit file for five years and your name will be listed on the National Personal Insolvency Index for at least five years. Your access to credible sources of credit will be severely limited.

Still, despite the consequences, there are some circumstances where insolvency makes sense. We would be pleased to help you understand the benefits, disadvantages and ramifications of bankruptcy and debt agreements at a free consultation.

You may feel like your situation is hopeless. Perhaps you're so deep in debt you don’t know which bills to pay first. We see situations like yours every day. We understand how easy it is to become frustrated, anxious and despondent.

But here’s the thing: Personal insolvency is usually avoidable.

It may seem like there’s no other way out right now, but in the majority of cases there is. Only a very small number of our clients proceed to bankruptcy or formal debt agreements. The majority are able to afford to pay their debts through negotiation and good money management in the form of a workable budget.

We can show you how.

The best way to assess if bankruptcy or a debt agreement is right for you is to fully understand all of the possible debt solutions for your specific situation.

In most cases, we find that the best strategies combine repayment negotiation with a budget plan that pays off the debt.

During a free, no-obligation consultation, we will assess your financial situation in detail, taking into account all of your bills, loans, income and living expenses—even money you owe your grandma. Since 1999, we’ve helped more than 65,000 clients with their finances, so we know how to tackle debt in ways that can relieve stress and have lasting results.

By the end of the session, you will have a customised, long-range budget plan that proposes how to tackle your debt and achieve your financial goals. Even if you decide not to join up with MyBudget, the budget plan is yours to keep at no cost to you.

If you do become a MyBudget client, we can communicate with your creditors on your behalf and often negotiate more affordable payment terms—terms that aim to free up your cash flow to meet other commitments and give you a chance to get back on your feet.

Last year, we successfully renegotiated over 3.4 million payments to creditors for our clients. We may be able to negotiate repayment schedules or even arrange for payments to cease for a period of time, if required.

Ultimately, whether you elect to enter into insolvency or not, budgeting is the only way to properly take control of your money.

In fact, budgeting is really important for people going through bankruptcy or experiencing insolvency. It’s the only method that will allow you to:

  • Develop a comprehensive understanding of your financial situation
  • Understand the immediate and long-range effects of your options
  • Maximise your use of income to reduce your debts
  • Take control of your spending habits

Save for the things you want and achieve your financial goals.

In some instances, bankruptcy or a Part 9 Debt Agreement is the best option. If so, MyBudget can help by administering your insolvency.

Our caring staff will explain the process every step of the way and answer all of your questions.

It all starts with a free, no-obligation consultation. Contact us today—a representative will collect some brief details about your financial situation and book a time for you to speak with one of our budgeting experts.

The free consultation is relaxed, friendly and completely confidential. It’s the perfect opportunity to explore whether declaring bankruptcy is the right solution for you.

See how we have helped others...

You could be a MyBudget success story too!

Gemma & Paul, MyBudget clients

“I always thought that I could handle the money well enough, and unfortunately even I had fallen short. We had just spent, not more than we earned but we spent everything we earned and it just meant that when those unforeseen bills came in we were stuck and it meant credit cards and it meant consolidating credit card on numerous occasions, more than once and it just got to the stage where I said we can’t do this anymore and Gemma had made the appointment and so we went and it’s been the best thing we’ve ever done.”

Gemma & Paul, MyBudget clients

Grant & Alisha, MyBudget clients

“I felt my only other option was to declare bankrupt and to try and get rid of the debts that I had against myself...I took every bit of information that I could possibly imagine to do with our finances and we sorted everything out within a couple of hours and I walked out of there feeling extremely comfortable."

Grant & Alisha, MyBudget clients

Debbie & Alan, MyBudget clients

“What I discovered is that the other companies I’d seen advertising debt consolidation, once you delved in a little bit deeper and made the phone call it was then, and only then, that we discovered it was what was known as a Part Nine agreement and that was not quite what we were looking for at that point in time because with some more research we found that it was a form of bankruptcy anyway. And that was always going to be our absolute last resort."

Debbie & Alan, MyBudget clients

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