In Australia, bankruptcy is a legal process governed by the federal government through the Bankruptcy Act 1966. The process is overseen by the Australian Financial Security Authority (AFSA), which is responsible for administering bankruptcies and debt agreements. Individuals who are unable to pay their debts can apply to the court to become bankrupt. Once an individual is declared bankrupt, they are subject to certain restrictions, such as not being able to obtain credit over a certain amount without disclosing their bankruptcy status.
In addition to individual bankruptcy, companies can also become bankrupt in Australia. This usually occurs when the company is unable to pay its debts and its creditors force it into liquidation. It is important to note that bankruptcy can have significant long-term consequences, including a damaged credit score, and should be considered as a last resort after exploring other options such as debt consolidation or negotiation with creditors.