The concept of Bankruptcy is broadly understood by all, however the issues that are involved when a person becomes Bankrupt are complex. Set out below are the answers to some of the most common questions we are asked about Bankruptcy. The answers are broad and generic and in all instances we recommend that specific advice be obtained before acting in response to any one of the questions:
When should a person go Bankrupt?
When all other legally available alternatives to come to an arrangement with an individual's creditors have been exhausted.
How do you become Bankrupt?
A creditor of an insolvent who is owed more than $5,000*, an amount determined by the Government, may petition to the Court for a person's Bankruptcy, OR the insolvent may apply voluntarily to be made Bankrupt by submitting a Debtors Petition with the Australian Financial Security Authority, GPO Box 1550, Adelaide SA 5001.
How long will the Bankruptcy last?
Generally a Bankrupt will remain so for 3 years. However provisions exist for Bankrupts to remain so for 5 to 8 years for non-compliance.
However, there are proposed changes from 2017, reducing the Bankruptcy period to 12 months.
What assets will a Bankrupt lose?
A Trustee administers a Bankrupt estate and only he/she or a secured creditor can deal with a Bankrupt’s assets. All monetary assets are available to the Trustee with the exception of "protected" necessary goods and property (these are specifically defined).
The above are simple answers to typical questions. There are many other issues such as income contributions, incurring credit and the effect of Bankruptcy on an insolvent’s registrations. Licenses and capacities are relevant but need far more detailed responses.
Macks Advisory can help advise individuals with personal insolvency problems and can act as a Bankruptcy Trustee if such an appointment is necessary. Individuals are invited to contact Peter Macks on 08 8231 3323 or email [email protected] with any queries.
* Current as at 27th April 2016