Can a Bankrupt run a Business as a Sole Trader?

Australian Capital Territory
New South Wales
Northern Territory
South Australia
Western Australia

Can a Bankrupt run a business as a Sole Trader?

A: Yes, as a Sole Trader under your own name*

*So long as the following important guidelines (as well as others not listed here) are met:

When dealing with your suppliers + customers, you must:

❌ NOT obtain credit of more than $6,065 from any person without informing them of your bankruptcy.

⚖️ This includes buying goods or services on credit, by hire purchase or by cheque;

⚖️ Lease, hire or promise to pay for goods or services; or a

⚖️ Promise to supply goods or services in return for payment.

✅ Operate the business under your own name; or

✅ If trading under a business name other than your own, you must inform every single person you deal with that you are an undischarged bankrupt.

Warning: Breach of the above may constitute a criminal offence pursuant to s.269 Bankruptcy Act 1966 (Comm.) carrying maximum 3 year prison sentence.

Can a Bankrupt operate a business using a Business Name?

A: Theoretically Yes (see the important guideline above) however the requirement to advise every single person you deal with that you are an undischarged bankrupt makes doing so impractical.

Can a Bankrupt be a Director of any Company?

A: No

A Bankrupt person is automatically disqualified from being a director of any company.

Note: The amounts mentioned in this FAQ are valid as at 27 October, 2021.

These amounts should only be taken as a general guide as many Bankruptcy related monetary thresholds are indexed/subject to change over time.


This FAQ was created by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.