Bankruptcy does not release a person from the following debts:
- debts incurred by the bankrupt since the bankruptcy
- debts arising from court fines or breaching bonds
- debts incurred by means of fraud or fraudulent breach of trust
- child support/maintenance
- Centrelink overpayments incurred as a result of actual fraud
- accumulated HECS (Higher Education Contribution Scheme) and HELP (Higher Education Loan Program) debts
- student assistance/supplement loans
- an amount payable under a proceeds of crime law
- interest accruing on a debt that is covered by bankruptcy for a period commencing on or after the date of bankruptcy
- unliquidated claims against the bankrupt not arising from breach of contract (e.g. claims arising from a motor vehicle accident in which the bankrupt was at least partly at fault). The event giving rise to the claim must have occurred prior to bankruptcy with the claim remaining unresolved at the date of bankruptcy. As a consequence, a debtor is advised to finalise this type of matter before becoming bankrupt.
A person remains liable for these debts even on discharge or annulment of the bankruptcy.
If a Centrelink overpayment occurs as a result of administrative error, it is included in debts discharged following bankruptcy.
A debt owed to the Australian Tax Office is released on bankruptcy, but the Tax Commissioner has the power to issue a Statutory Garnishee over wages. If the statutory garnishee is issued prior to the date of bankruptcy, it will not be released.
The Australian Financial Security Authority has a comprehensive table comparing types of debts, and the effect of bankruptcy on them. If you are unsure about your debt and whether a creditor can continue to demand payment for it, get legal advice.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.