Personal insolvencies include bankruptcies or debt agreements and they stay on your credit report for at least 5 years.
You can be declared bankrupt if you apply for bankruptcy or a creditor applies for you to be declared bankrupt. This is usually when the creditor has tried to unsuccessfully recover debts that total at least $5,000.
Bankruptcy means that a trustee appointed by the Australian Financial Security Authority (AFSA) will be in charge of your finances. You might have to arrange for regular payments, and even sell your belongings or property.
A debt agreement is when you to come to an arrangement to settle debts between you and your creditors without becoming bankrupt.
Under a debt agreement, your creditors agree to accept a set amount of money you can afford to pay over a set period of time, so you can settle your debts.