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Learn about the three ways that you can end your bankruptcy early. Find out what compositions are, how they work and what happens if the creditors accept your offer.
What is an annulment?
Annulment is the cancellation of a bankruptcy. There are three ways you can annul your bankruptcy:
Pay debts in full
This includes interest, realisations charges and your trustee’s fees and expenses. Contact your trustee to discuss this process.
Arrange a composition
Your creditors accept an arrangement we call a composition. This is an offer of something less than payment in full.
Prove it in court
You successfully prove to the court that you should not have become bankrupt. For example - someone stole your identity. We recommend you seek your own legal advice regarding this process.
If your annulment is successful your name remains on the National Personal Insolvency Index (NPII) with your bankruptcy listed as 'annulled'.
What is a composition?
A composition is an offer to creditors to repay a percentage of your debts. If successful, this annuls your bankruptcy. It’s up to you to decide what you can afford to offer.
You can make an offer using money or assets that your trustee can’t claim. For example - a relative offers to repay your debts.
The steps below outline the process of making an offer.
- Contact your trustee to discuss the requirements for making an offer.
- If your trustee is the Official Trustee (AFSA) you can find our contact details on our contact us pages.
- Contact your creditors to see what sort of offer they are willing to accept. This can help you decide whether you want to submit a formal offer to your trustee.
- Lodge your written and signed offer with your trustee. In your offer:
- set out the terms
- allow for payment of the trustee’s fees and expenses
- allow for payment of the realisations charge. See fees and charges.
Once you’ve submitted your composition
- Your trustee will prepare a report about your offer to creditors.
- Your trustee will hold a meeting where creditors can vote to accept or reject the offer.
- Acceptance of your offer requires a 'yes' vote from majority in number of creditors and 75% of the dollar value. We refer to this as a special resolution.
- Your trustee may charge a non-refundable fee to cover the cost of the creditors’ meeting. See fees and charges.
If creditors accept your offer
- Your bankruptcy will be annulled immediately, and the NPII updated to reflect this.
- You arrange with your trustee to pay the agreed amount to your creditors.
- You pay your trustee’s fees and charges.
- You are still liable for any debts not covered by bankruptcy.