What is bankruptcy?
Bankruptcy is a legal process where a person is declared unable to pay their debts. When a person is declared bankrupt, a person (known as a trustee) is appointed to manage their bankruptcy. The law of bankruptcy is governed by the Bankruptcy Act 1966 (Cth).
How long is a person bankrupt for?
A person is normally bankrupt for three years and one day.
Which fines can the Director of Fines Victoria enforce?
The Director can enforce:
- registered infringement fines with an
offence date after the person became
bankrupt and that are at the enforcement
and warrant stage of the Infringement
Fines Lifecycle (PDF) (for example, a person who
was declared bankrupt on 25 March 2020
and received an infringement on 3 April
2020), and
- fines or orders imposed by a court and
that are at the enforcement and warrant
stage of the Court Fines
Lifecycle (PDF) (for example, court fines or
enforcement hearing orders).
The bankrupt person is responsible for these
fines and retains the right to deal with them.
If these fines are outstanding, the Director
can enforce the fines including by applying
sanctions (for example, driver and vehicle
sanctions) or by applying for a warrant.
Which fines cannot be enforced by the Director?
The Director cannot enforce registered
infringement fines with an offence date before
the person became bankrupt and that are
at the enforcement and warrant stage of the
Infringement Fines Life Cycle (for example,
a person who was declared bankrupt on
25 March 2020 and received a speeding fine
on 3 April 2019).
The Director cannot take steps to enforce
these fines, however the bankrupt person
retains the right to deal with them if they want
to. The bankrupt should seek advice from a
financial counsellor or a lawyer before making
arrangements to pay fines that cannot be
enforced by the Director.
Which fines can enforcement agencies enforce?
Enforcement agencies can enforce
infringement fines that are not registered with
the Director, such as by taking the person to
court or taking other action. The bankrupt
is responsible for these fines and retains the
right to deal with them. These are fines at the
infringement stage of the Infringement Fines
Lifecycle.
The bankrupt should contact the enforcement
agency and advise them of their bankruptcy as
soon as possible.
Who can notify Fines Victoria that a person is bankrupt?
The person (or their authorised representative),
the Australian Financial Security Authority
(AFSA) or the bankrupt's trustee in bankruptcy
can notify Fines Victoria.
What information should be given to Fines Victoria?
The person making the notification must provide Fines Victoria with:
- the bankrupt's name and address
- the bankrupt's bankruptcy number
- the date bankruptcy commenced
- the bankrupt's date of birth
- the name and contact details of the trustee in bankruptcy.
If this information is not provided, there could be some delays with processing the notification.
What will Fines Victoria do when they receive a bankruptcy notification?
Fines Victoria will:
- identify the fines that are subject to the
person's bankruptcy, and
- send a letter to the bankrupt person
informing them of all the fines that will
not be enforced by the Director (that is,
registered infringement fines with an
offence date before the person became
bankrupt), and
- suspend enforcement of the fines that
are subject to the person's bankruptcy so
that they cannot be enforced during the
bankruptcy period.
When will these notifications be actioned?
If all the bankruptcy information is provided,
the notification will usually be actioned within
three business days.
Will enforcement action stop when you receive a bankruptcy notification?
Yes, the fines (subject to bankruptcy) will not be enforced during the person's term of bankruptcy.
Can enforcement agencies commence proceedings or collect a debt that is already registered with the Director of Fines Victoria?
No, registered fines sit with the Director and cannot be enforced by the enforcement agency.
Can enforcement agencies de-register a fine once it is registered with the Director of Fines Victoria?
Enforcement agencies cannot deregister a fine, however they can ask the Director to refer the fine back to them. The Director will only refer a fine back to the enforcement agency if the Director considers it is appropriate to do so.
Will the Director consider a debt agreement as an alternative to bankruptcy?
The Director will consider any debt agreement provided by a person as an alternative to bankruptcy.
If a person enters into a debt agreement and the Director of Fines Victoria is listed on the agreement, the Director will honour the terms of the debt agreement, provided that unpaid fines are treated substantially the same as any other unsecured creditor.
If the debt agreement is subsequently terminated, enforcement action will continue for any unpaid fines.
Will the Director consider a personal insolvency agreement as an alternative to bankruptcy?
The Director will consider a personal insolvency agreement (PIA) under the Bankruptcy Act if it is accepted by a majority of creditors.
If a person has a PIA (as described above) they will be treated similarly to a bankrupt. If the PIA is subsequently terminated, enforcement action will continue for any unpaid fines.
Will the Director be taking steps to prove a fine debt?
It is important to note that while bankruptcy may lead to certain infringement fines being unenforceable under the
Fines Reform Act 2014 (Vic), the Director may seek to recover these fines by proving the debt under the Bankruptcy Act.
It is not proposed that the Director would routinely seek to prove fine debts. There may however be cases where the Director considers it appropriate to do so.
What will happen at the end of the person's bankruptcy period?
AFSA, the bankrupt or their representative are advised to notify the Director when the bankruptcy period ends so the fines can be written off. They should also provide supporting information so these notifications can be processed quickly.
When the Director becomes aware that the person's bankruptcy period has ended, infringement fines registered with the Director with an offence date before the person became bankrupt will no longer be enforceable.
Can a bankrupt person still deal with their fines?
Yes, a bankrupt person can still deal with their fines by:
- paying in full
- applying for a payment arrangement or time to pay order
- submitting a nomination statement
- applying for an internal review or enforcement review
- applying for a work and development permit through a sponsor
- applying under the family violence scheme.
There may be some eligibility criteria. Visit
Family Violence Scheme for more information on
these options.
Before taking any of the actions listed above, the bankrupt person may wish to consider whether it is likely that the Director or enforcement agency will enforce the fine, noting that:
- infringement fines registered with the Director (with an offence date before the date of bankruptcy) will not be enforced during and after the person's bankruptcy
period.
- court fines, infringement fines not registered with the Director and infringement fines registered with the Director (with an offence date after bankruptcy) will be enforced during and after the person's bankruptcy period.
Who can a bankrupt person contact for more information?
To learn more about bankruptcy or to get financial advice and information, visit:
For legal advice about specific circumstances, visit Federation of Community Legal Centres to find a local community legal centre or visit Consumer Action Law Centre for legal help.
For general information on how bankruptcy operates under the Fines Reform Act, please call (03) 9200 8222 between 8am and 6pm weekdays, except public holidays.