A lot of debtors find bankruptcy as the final solution to settle their debt issues. Though declaring bankrupt has many impacts on the credit score and financial status of the debtor, it can solve their debt problems. Declaring yourself bankrupt in Australia is done in two ways. The creditor approaches the court to declare the debtor bankrupt on the basis of the evidence of an act of bankruptcy. The other method is to declare voluntary bankruptcy. In this method you are declaring yourself bankrupt by submitting a petition to the Insolvency and Trustee Services Australia (ITSA).

In order to declare voluntary bankruptcy, the debtor must obtain a Debtor's Petition and a Statement of Affairs forms from the ITSA. The completed forms must be submitted to the ITSA and wait for their approval. Once the ITSA accepts the petition, the person is declared bankrupt. This procedure requires the debtor to furnish all his personal and financial details in the forms. The Statement of Affairs in particular must include information like the name and address of the debtor, details of all his debts, the amount owed and the creditors, and complete information about income and assets of the debtor. Hiding any information or selling properties unlawfully will be seen as breach of law. The person may then be imprisoned and his bankruptcy period will be extended.

Once the Official Receiver in Bankruptcy accepts the forms, the person receives a bankruptcy number and a list of duties, information and obligations that he has to perform as a bankrupt. The ITSA may delegate the bankruptcy case to a private trustee. Or, if the debtor already has appointed a trustee, he will be administering the bankruptcy.

After the person has declared voluntary bankruptcy he is expected to fulfill some obligations as stipulated by the ITSA.
· The person cannot leave Australia without the written permission of the trustee
· Should disclose that he is an undischarged bankrupt while getting a credit
· Cannot manage a corporation without the permission from Court
· Cannot run business either as a single person or as a partner or under another person's name
· The trustee must be informed of all changes in name or residence
· Provide all the information the trustee demands, and attend meetings

When voluntary bankruptcy is declared, the trustee will be controlling the assets of the debtor. Assets or property obtained during the bankruptcy period also go under the control of the trustee. However, the bankrupt can possess some property for his own use. They include:
· Clothes and household furniture
· Property from which an income is obtained
· Private vehicles
· Children's bank accounts
· Insurance and endowment policies
· Compensation from damages
· Awards and rewards

Again, if the bankrupt is earning an income above a threshold value, he is expected to make payments for the earnings above the threshold value.

If the debtor is able to pay back all his debts within the three year bankruptcy period, the bankruptcy can be annulled. Similarly, if the person can arrange money from friends or relatives, the trustee will arrange a meeting of the creditors. If a majority of the creditors accepts the offer of the debtor, the bankruptcy can be annulled through a special resolution.

For more great information on declaring yourself bankrupt , visit http://www.armstrongwily.com.au/articles>

The information in this article is correct as at the date of writing and should be relied upon as a guide only.  Always seek professional advice before taking any further action.