Bankruptcy Due to Lockdown

There’s no denying that the extended COVID-19 lockdowns being imposed, initially in Melbourne and Sydney, and now more regionally in NSW, thanks to the emergence of the highly infectious delta variant, are starting to bite. While this measure is integral for our health and safety, many businesses are now bearing the brunt of these lockdowns. Whilst some impacted businesses have been lucky to receive cash flow boosts from the government to keep them afloat over this challenging period, there are many that are struggling.

Back in July it was estimated that the extended lockdown in greater Sydney was costing the economy about $1 billion a week. Unfortunately, the spread of the delta variant and increase in cases has resulted in a state-wide lockdown to keep the people safe and has even spread back to Melbourne. Larger businesses should be able to ride out the crisis, but multiple small and even medium-sized businesses are fighting for survival as every day we face tighter and tighter restrictions.

Things to Avoid Before Going Bankrupt Due to the Lockdown

If you are facing bankruptcy due to the lockdown, here are the main four things you need to avoid doing to prevent further problems.

1.   Use Credit Cards

The most crucial step you need to take in this situation is to stop using your credit cards. It might be tempting to make small purchases, like fuel and food, the interest rates and penalties if you can’t cover even the minimum amount each month will only make it harder to keep on top of your repayments.

Moreover, making bigger purchases knowing you will be going bankrupt soon can be considered fraud. Maxing out your cards before declaring bankruptcy would put you in a worse position once creditors start their investigations.

2.   Repay Creditors

When facing uncontrolled debt, avoid repaying the creditors before you declare bankruptcy. Whilst it may seem sensible to settle what debt you can, it can actually cause more problems. If you repay one creditor over another, it might be considered a ‘preferential transfer’ that could attract legal action, ultimately delaying your bankruptcy filing.

3.   Conceal Information or Lie

Never lie or conceal any information linked to your financial situation. By law, you are obliged to provide detailed and accurate information about your expenses, debts, income, and assets when you file for bankruptcy. Failing to do so would be taken as misrepresentation, and you can be held liable for criminal prosecution or at best your bankruptcy could be extended up to 8 years.

4.   Move or Transfer Assets

Moving or transferring any asset, such as your work vehicle, to a someone else’s name to protect it from bankruptcy won’t work. Doing so will not shelter your asset and might even be regarded as fraudulent activity that have criminal repercussions.

Bankruptcy is an emotional and complicated experience and many business owners and individuals end up digging a deeper hole for themselves in the hopes of protecting themselves from bankruptcy.


But, if managed properly, bankruptcy can provide relief from the stress of debt and the harassment from debt collectors, allowing you and your family a fresh start. In fact, it may turn out to be the best option for your particular circumstances Therefore, we recommend you consult a bankruptcy professional to evaluate your situation and determine the right course of action before making any decision.

If you’re thinking bankruptcy might be a solution to your debt woes, the team at Fix Bad Credit can help. Our debt experts will assess your financial situation for free and identify debt solution options tailored for your specific personal financial circumstances, using their in-depth knowledge of credit law and debt processes. If you decide that bankruptcy is your best option, Fix Bad Credit can advise you through the process of filing for bankruptcy.


Debt is one of the few stressors in life that doesn’t go away. The worry is always there, along with the feeling that there is nothing that can be done about it. Money and debt worries cause heavy emotional and mental burdens, affecting your health, your work, and your relationships. But know you’re not alone. If you’re feeling overwhelmed by money matters, we’re here to help you find relief from your debt stress. Talking about debt can be daunting. It’s hard to know where to start or what your options are. However, you can take a small step right now by picking up the phone. For more information on what might be the best option for you, call one of Fix Bad Credit’s debt experts on 1300 406 172.


If you are considering bankruptcy but are confused or afraid about what you have read or heard others say, check out this blog outlining the most common myths, lies, and misconceptions about bankruptcy.

B M Peachey

B M Peachey, has over 15 years of experience investing in property and the stock market, in both New Zealand and Australia. She has a post-graduate degree, with qualifications in Finance and Mortgage Broking and in Accounting and Bookkeeping. She is passionate about ensuring people have access to credible, reliable, and easy to understand information to help them get in control of the life they REALLY want to live.

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    Disclaimer: The information in this article is general in nature as it has been prepared without taking account of your specific objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.