Bankruptcy
Bankruptcy is when a person who can’t pay their debts gives up control of their finance and assets in exchange for protection from legal action by creditors. Bankruptcy can release you from some debts.
You can become bankrupt:
- if you voluntarily apply to the Australian Financial and Security Authority (AFSA), or
- if someone you owe money to (a creditor) applies to the Court to make you bankrupt.
Bankruptcy will not always release you from having to pay restitution. Whether you are liable will depend on when you applied for bankruptcy.
This section covers:
If you are already bankrupt and have received an order for restitution
If you are already bankrupt and you have received an order for restitution from Victims Services, you may still be liable to pay the amount of the order for restitution.
Any debts incurred after you are bankrupt are considered new debts and you may not be able to be released from those debts.
If you are thinking of applying for bankruptcy
Bankruptcy will not release you from all types of debts and it is usually something you do as a last resort because it has serious consequences.
For more information, see 
Consequences of bankruptcy on the Australian Financial Security Authority website.
When you become bankrupt, a trustee is appointed to manage your money and assets. Bankruptcy usually lasts for three years and one day.
Before you consider applying for bankruptcy you should talk to a free financial counsellor about your options.
For more information about financial counselling, see Talk to a Financial Counsellor on the National Debt Helpline website.
If you apply for bankruptcy after receiving an order for restitution
If you apply for bankruptcy after an order for restitution is made against you but before the order is confirmed, you may still be liable to pay the amount of the order.
Before the order is confirmed it is not considered a debt and therefore you can’t be released from liability. If you have already applied for bankruptcy, you should speak to your trustee about your situation.
If you apply for bankruptcy before receiving an order for restitution but no sequestration order is made until after the order for restitution is confirmed
A sequestration order is an order made by the court which makes you bankrupt.
If you apply for bankruptcy before an order for restitution has been issued but a sequestration order is not made until after the order for restitution is confirmed by Victims Services, you may not be liable to pay the amount of the order. This is because a debt must exist before you are made bankrupt for it to be extinguished by your bankruptcy.
You should speak to Revenue NSW and let them know that you have applied for bankruptcy. You may need to provide evidence of when you were declared bankrupt.
If you have already applied for bankruptcy, you should speak to your trustee about your situation.
If you apply for bankruptcy after an order for restitution is confirmed
When an order for restitution is confirmed you are liable for the restitution debt.
If you apply for bankruptcy after an order for restitution is confirmed by Victims Services, you may not be liable to pay the amount of the order.
You should speak to Revenue NSW and let them know that you have applied for bankruptcy. You may need to provide evidence of when you were declared bankrupt.
When you apply for bankruptcy you should include the details of the order for restitution in your bankruptcy application.
If you have been declared bankrupt, you should speak to your trustee about your situation.