Former Liberal senator Linda Reynolds sued both her former political staffer and David Sharaz over a series of social media posts she claimed damaged her reputation.
The former defence minister had a high-profile victory over Ms Higgins at trial, and Mr Sharaz bowed out before the proceedings started, saying at the time he couldn't afford a lawyer.
Mr Sharaz, an ex-journalist, was found to have defamed Ms Reynolds and was ordered to pay her $85,000 in damages plus interest and costs.
Ms Higgins was ordered to pay $315,000 in damages plus $26,109 interest and 80 per cent of her former boss's legal costs, which are estimated to be more than $1 million.
Ms Reynolds launched bankruptcy proceedings in October against the couple and on Tuesday, Mr Sharaz was declared bankrupt in the Federal Court in Perth.
Outside of court, Ms Reynolds' lawyer, Martin Bennett, said the bankruptcy was "a consequence of Mr Sharaz defaming (Ms Reynolds)".
"He couldn't afford a ticket on the Titanic, but he certainly goes down on the ship," he said  in reference to Mr Sharaz's inability to defend himself against Ms Reynolds' defamation lawsuit.
Mr Bennett said he wasn't surprised Mr Sharaz hadn't engaged in the legal proceedings.
"He's the one person who's never got in the witness box to defend the accounts of Ms Higgins," he said in reference to her trial against Ms Reynolds.
"He's never subjected himself or opened himself up to cross-examination. He is the mystery person who's never appeared."
Mr Sharaz's bankruptcy was backdated to October 31, and his estate will be handed over to the trustee for management.
Ms Higgins was declared bankrupt last week.
Mr Bennett previously said it would allow Ms Reynolds to find out how much of Ms Higgins' $2.4 million compensation payout from the Commonwealth remained as she attempted to recoup her legal costs and damages for the defamation case.
Justice Paul Tottle found in August Ms Higgins' social media posts carried an array of defamatory imputations following a harrowing five-week Supreme Court trial.
They included that Ms Reynolds engaged in a campaign of harassment against Ms Higgins, mishandled her rape allegation and engaged in questionable conduct during Bruce Lehrmann's aborted criminal trial for rape.
The 360-page judgment made factual findings about the events involving Ms Reynolds and Ms Higgins, including her alleged 2019 rape and the events in the years after it.
Ms Higgins alleges former co-worker Lehrmann raped her in the senator's ministerial suite.
A Federal Court judge overseeing a defamation case launched by Lehrmann against Network Ten found Ms Higgins was, on the balance of probabilities, raped by her former co-worker in the office.
Lehrmann has lost an appeal against that finding but has flagged taking the case to the High Court.
He denies the rape allegation and his criminal trial was derailed by juror misconduct.
Ms Reynolds has also started legal action against the Commonwealth and its lawyers, claiming they breached a duty of care to her over the handling of Ms Higgins' settlement.
"We've still got a chapter of this long saga to go ... but that's the last chapter," Mr Bennett said.
1800 RESPECT (1800 737 732)
National Sexual Abuse and Redress Support Service 1800 211 028
17°C