Discharge from bankruptcy

A discharge from bankruptcy is an order from the court discharging a bankrupt from bankruptcy. It means that the period of bankruptcy has concluded and the person is no longer an undischarged bankrupt. This typically occurs automatically, three years and one day after the person’s statement of affairs is accepted, although this can be extended. Objections to automatic discharge can be lodged by the trustee to induce further compliance from a bankrupt. These typically extend the period of bankruptcy by either five or eight years. The provisions for discharge are outlined under section 149 of the Bankruptcy Act 1966. After they are discharged, the bankrupt is no longer required to comply with most of the provisions of the Act, but they retain some ongoing obligations to assist the trustee in bankruptcy who was assigned to manage their affairs.

When the bankrupt is discharged, most pre-bankruptcy debts are extinguished. Exceptions include:

  • Court imposed fines for offences against the law
  • Damages claims from accidents
  • Debts under maintenance agreements/orders
  • Some student debts
  • Fraudulently incurred debts