Generally, your employment is not affected by bankruptcy, and the Bankruptcy Act does not prevent you from working in a particular job. But there are some professions where bankruptcy may impact your employment. You should check with your professional association, and read your employment contract, to see whether there is any reference to insolvency or bankruptcy. You should also refer to the AFSA website for details of employment restrictions in bankruptcy.


If you are self-employed, the situation is not as straightforward. Self-employment can take many forms and the law can be complex. Below is a brief outline of the impact of bankruptcy on various types of business structures, but we recommend that you contact BT Acumen to discuss how entering bankruptcy will impact on your unique situation.

Sole Trader: If you trade using a business name, you must tell everyone you deal with (including customers and suppliers) that you are bankrupt. If you trade using your full name you generally don’t need to disclose your bankruptcy (unless obtaining credit).

Partnership: The law says that existing partnerships are dissolved when at least one partner enters bankruptcy. But you can trade as a new partnership commenced after the date of entering bankruptcy. If the new partnership trades under a business name you must disclose your bankruptcy status to everyone you deal with (including customers and suppliers).

Company: You are not allowed to be a director or manage a company when bankrupt unless you have permission from the court. For further information contact the Australian Securities Investment Commission (ASIC).

Trust: You may not be able to act as the Trustee of a trust when bankrupt (including a family trust or a self-managed superannuation fund). The assets held in trust may become assets that your bankruptcy Trustee can claim.

Business Stock and Other Business Assets: Business stock and assets purchased during your bankruptcy may be able to be claimed by your bankruptcy Trustee.

Credit: It is illegal to obtain credit for your business, or yourself personally, above a set amount without disclosing you are bankrupt. Credit includes paying for goods or services over the set amount on a credit card, or with a cheque.


Normally, you are not prevented from working whilst bankrupt. However, becoming bankrupt could impact on your income and the type of job you can have.

Whilst bankrupt, you must keep your Trustee updated with any changes to your income or job.

There is no limit on how much you can earn whilst bankrupt. If your after-tax income is higher than a set amount you are required to make payments from your income to the Trustee. The set amount changes with how many dependants you have. The Trustee uses these payments to help repay your debts. Your Trustee will advise you when and how to make the income payments. For more information see the Government’s bankruptcy income contribution information here.


If you receive a payout of superannuation after you enter bankruptcy, the funds are protected and cannot be claimed by your Trustee.

But, if you receive a payment from your superannuation fund before you entered bankruptcy, the Trustee is allowed to claim those funds and use the proceeds to pay towards your debts.

For information on whether you are eligible to withdraw funds from your superannuation contact the Australian Prudential Regulation Authority (APRA) on 1300 131 060.

Compensation payments

Compensation payments relating specifically to personal injury are protected and cannot be claimed by your Trustee, regardless whether the funds were received before or after you entered bankruptcy. If you convert the personal injury compensation payment to an assets or property, what you purchased is also protected and cannot be claimed by the Trustee.