Contrary to popular belief, declaring bankruptcy or entering into any agreements under the Bankruptcy Act 1966, does not have any particular implications on one’s employment options. The Bankruptcy Act itself does not mention any professions or business activities that cannot be carried on by a bankrupt individual.
But there are certain professional associations and licensing authorities that have bylaws, that can prevent their members or licensees from practising their professions, in case they declare bankruptcy. This is especially true for accountants, builders, plumbers, electricians, legal practitioners and licensees in the real estate industry. There are many other professions, each with their own regulatory authorities, that have their own mandates for bankrupts in their respective professions. For a full list, visit here.
Thus, for example, an accountant who is a member of the Institute of Chartered Accountants, declares bankruptcy, then such a declaration automatically rescinds his membership of the Institute, and he no longer can practice accountancy. Additionally, bankrupt individuals cannot get employment in the Police Department, Defence Forces, Parliamentary offices, or even work as escorts/prostitutes or hold a liquor or gaming license, due to the nature of these professions. Thus it is advised that persons engaged in such professions, must consult with their professional associations and governing authorities before declaring bankruptcy, to get a clear idea about how it would impact their employment.
For someone who is a sole trader, or in other words, is running their own business, there are certain obligations that one is required to fulfil, in case they declare bankruptcy. One such obligation is that the individual’s full name should be a part of his business’ name. For example, if Anastasia Shepherd declares bankruptcy, then her business name can no longer be “Annie’s Cupcakes”, but will have to be altered to “Anastasia Shepherd’s Cupcakes”. Alternatively, in case the business owner does not wish to change the name of his business, then it is his obligation to disclose to all his clients, that he is bankrupt.
If one is the director of a company, then one can no longer be on the Board of Directors, without the prior permission of the court. For more information on this subject, one should consult with ASIC (Australian Securities Investment Commission), as to their rules concerning directorships of bankrupt individuals.
Furthermore, if you as an employee declare bankruptcy, then you need not worry about your employer getting informed of your financial position, as the government or the trustee do not send a notice to your employer. But one should keep in mind that as per law, one’s name will get published on the National Personal Insolvency Index (NPII), in case bankruptcy is declared. And thus your employer at his own discretion, can look up your name on the Index and learn about your financial situation, present or past.