by Jeff Shute15.12.22


Realising that bankruptcy could be in your future is an understandably scary and overwhelming prospect. Particularly if you are a business owner who has not only your own financial future to consider, but also that of employees and stakeholders. With that, avoiding bankruptcy is a priority worth thoroughly investigating if you’re finding it increasingly difficult to stay on top of your debts, or simply want to future-proof yourself and greatly mitigate the risk of facing bankruptcy. Here are some ways you can stop imminent bankruptcy and avoid the longer term consequences of filing. 

Setting yourself up for bankruptcy avoidance

Approaching ‘what can I do to stop imminent bankruptcy’ can be taken in a few different ways. You may be seeking this information because you are imminently facing bankruptcy. However, it can also be valuable information to stop ever having to face it, by doing mitigating behaviours today. With that, there are a few habits that offer greater financial health and safety nets to help avoid the onset of imminent bankruptcy. While there are extenuating circumstances that can’t be avoided (the recent interest rate hikes are a big example of this), the best ways to protect yourself are:

  • Engage professional assistance on your financial planning and forecasting. The specific and in depth knowledge of a professional financial advisor to help you work through risk mitigation and best practices. 

  • Make (and stick to) a sustainable budget that includes contingency funds

  • Understand the importance of red flags; even if you miss one creditor payment, take a look at your cashflow and profit and see where things went wrong. Make movements to rectify the problem in the process before you face the next missed payment. 

  • Boost your cash flow and profit opportunities where possible

  • Investigate consolidating or settling debts if there are ever payment issues

Arrange a debt agreement

If you are imminently facing bankruptcy and want to avoid needing to file, there are some ways to arrange your circumstances to stay on financial track. The most common is through a debt agreement. This is an agreement proposed to the creditors that you will enter a repayment plan for provable debts, and creditors are entitled to vote on the proposal. Should it be accepted, a registered debt agreement administrator (approved by the Australian Financial Security Authority, AFSA) administers it to begin proceedings. 

There are some eligibility criteria that include unsecured debts, property and income flow meeting the statutory thresholds (current as at December 2022):

  • $128,528 for debts

  • $257,056 for property

  • $96,396 of after tax income. 

Debt agreements are a great option if your creditors are onboard with a quicker process to retrieve their debts, even if it is in smaller increments over time and potentially a lesser overall amount. 


Imminent bankruptcy can mean anything from being at the point of not being able to pay debt, to being at the precipice (or even actually) filing for bankruptcy before formally becoming bankrupt. While the majority of these cases are for people who are past the point of return, there are some instances where bankruptcy no longer applies to their circumstances and it can be annulled. 

The three main ways an annulment can happen is:

  • If debts are paid in full. If you’re able to pay your interest, realisation charges and trustee fees and expenses, then you could be eligible to annul your bankruptcy. 

  • You can arrange a composition agreement. This is an offer to your creditors to specifically pay less than the amount owed, and have their agreement on that arrangement. (As opposed to a debt agreement, where the amount paid back isn’t necessarily less than what is owed). 

  • Prove you should never have been made bankrupt, in court. This typically refers to situations where the bankruptcy came about due to stolen identity or similar instances of the debt not being procured by you, or a debt you weren’t legally responsible for. 

If you are facing imminent bankruptcy, or you would like to learn more on avoiding it, talk to our knowledgeable and experienced team today.