Written byThe Australian Financial Security Authority (AFSA) is the federal agency that administers bankruptcy and other personal insolvency options and runs the Personal Property Securities Register.
Also known as: AFSA, Australian Financial Security Authority, bankruptcy regulator
Key points
- AFSA handles personal insolvency, which covers individuals and sole traders; company insolvency and liquidation sit with ASIC.
- It keeps the National Personal Insolvency Index, a public record of every bankruptcy, debt agreement and personal insolvency agreement, which lenders search.
- The PPSR, where lenders register security over cars and equipment, is run by the Registrar of Personal Property Securities inside AFSA.
- AFSA also regulates the trustees and administrators who run insolvencies, and manages assets seized under proceeds of crime laws.
What AFSA does
AFSA administers the Bankruptcy Act. When an individual cannot pay their debts, the formal options all run through it: temporary debt protection, a debt agreement, a personal insolvency agreement, or bankruptcy itself. Bankruptcies are managed either by a registered trustee in private practice or by AFSA's own Official Trustee, and AFSA regulates the trustees and debt agreement administrators who do the work.
It is also a record keeper. The National Personal Insolvency Index lists every person who has entered a formal insolvency arrangement, when, and what type, and it is searchable by anyone for a fee. AFSA publishes the statistics that show how many Australians are entering and leaving the system each quarter.
AFSA and your credit
A lender assessing an application will usually run a bankruptcy search against the index as well as pulling a credit report. Bankruptcy, debt agreements and personal insolvency agreements also appear on the credit report for a set period. Lodging a debt agreement proposal is itself an act of bankruptcy under the Bankruptcy Act, which is why lenders treat it almost as seriously. During a bankruptcy there are limits on how much can be borrowed without telling the lender about it.
After discharge, finance is possible but narrower. Mainstream lenders often want a period of clean history first; specialist lenders in bad credit finance will look at an application sooner, at a price. Hardship arrangements with a lender, by contrast, are not insolvency and do not go on the index.
AFSA and the PPSR
The Personal Property Securities Register is AFSA's other big register. Lenders record their security under a secured loan over cars, trucks, machines and business assets there, and anyone buying a used asset can search it for a small fee to see whether money is still owing. AFSA also polices the register, removing stale registrations that lenders have failed to discharge.
For a borrower, that makes AFSA the place to check when a lender has not lifted its registration after a loan was paid out. For a buyer, it is why a PPSR certificate dated the day of purchase protects you if a lender later claims the asset.
Example
A hairdresser in Bunbury entered a debt agreement after a business partnership went bad, completed it in full, and now wants finance for a new salon fit-out. The lender's bankruptcy search against AFSA's index shows the agreement and its completion date; her credit report shows it too, with the date it will drop off. Her broker explains that a couple of mainstream lenders will not look at the application until the listing expires, and places it instead with a lender that accepts completed arrangements, at a higher rate for now, with a plan to refinance once the listing is gone.
Not to be confused with
- ASIC
- ASIC regulates companies and their insolvency, while AFSA covers individuals and sole traders
- Australian Financial Complaints Authority (AFCA)
- AFCA resolves complaints against financial firms, while AFSA administers bankruptcy and the PPSR
Frequently asked questions
Is AFSA a government agency?
Yes. AFSA is an Australian Government agency within the Attorney-General's portfolio. It administers the Bankruptcy Act and the Personal Property Securities Act, runs the Official Trustee, keeps the National Personal Insolvency Index and the PPSR, and regulates registered trustees and debt agreement administrators.
What is the National Personal Insolvency Index?
A public register, kept by AFSA, of everyone who has entered a formal personal insolvency arrangement in Australia: bankruptcies, debt agreements and personal insolvency agreements. Entries stay on the index permanently, with the type and dates recorded, so a discharged bankruptcy still shows. Lenders, some employers and members of the public can search it for a fee.
Can I get finance after bankruptcy?
Yes, though the options are narrower and dearer for a time. The bankruptcy stays on your credit report for a set period after it ends, and many mainstream lenders wait for that to clear. Specialist lenders will consider applications sooner, usually with a larger deposit or higher rate. A broker can say which lenders will look at your circumstances.
How do I check if someone is bankrupt?
Through AFSA's Bankruptcy Register Search, which queries the National Personal Insolvency Index. Anyone can run a search for a fee using the person's name and date of birth. It shows formal insolvency arrangements only: a person who is simply behind on debts, or in a hardship arrangement with a lender, does not appear.
What is the difference between AFSA and ASIC?
AFSA deals with people: personal bankruptcy, debt agreements, the insolvency index and the PPSR. ASIC deals with companies and the financial services industry: company registration, liquidation and administration, credit and financial services licensing, and enforcement of the credit laws. A sole trader who cannot pay debts ends up with AFSA; a company in the same position ends up with ASIC.
Related terms
Bankruptcy
Bankruptcy is a legal status for an individual who cannot pay their debts, under which a trustee takes control of their affairs and deals with creditors on their behalf.
Read definitionPersonal Property Securities Register (PPSR)
The Personal Property Securities Register (PPSR) is the national online register where lenders and suppliers record security interests over personal property such as vehicles and plant.
Read definitionLiquidation
Liquidation is the process of winding up a company: a liquidator takes control, sells its assets, pays creditors in a set order of priority and the company is deregistered.
Read definitionHardship
Financial hardship is when a change in your circumstances, such as job loss or illness, means you cannot meet your loan, credit or bill repayments on time.
Read definitionDefault
A default is a borrower's failure to meet the terms of a credit contract, usually by missing repayments, which lets the lender demand the balance and enforce its security.
Read definitionBad credit finance
Bad credit finance is a broad category of lending products designed for borrowers whose credit history shows defaults, court judgments or bankruptcy, problems that make mainstream lenders hesitant.
Read definitionGo deeper
Sources
This article is general information only and is not financial advice.