Bankruptcy occurs when a person can no longer pay their bills in a timely manner. There are two ways Bankruptcy can occur. A creditor can take legal action eventuating in making someone bankruptcy or a Debtor can file for bankruptcy when they have had enough of the pressures associated with debt.
Bankruptcy was designed to allow Debtors the ability to start fresh with dignity and without hassle from Creditors. The Bankruptcy Act 1966 was created to establish guidelines for all those involved in the process. We have provided a link below for further reference.
AFSA - www.asfa.gov.au
Frequently Asked Questions About Bankruptcy
How will my creditors be affected?
Once you are bankrupt, unsecured creditors should stop contacting you seeking repayment of the debt. If not you should contact your Trustee and ask that they contact the creditor directly. Secured creditors, who hold security over property, will likely be entitled to seize the property and sell it if you fall behind in payments, so they may contact you to discuss this.
Will I lose my house?
Not necessarily. There are a number of variables and needs to be discussed.
How long will I be bankrupt?
Bankruptcy generally lasts for a period of three years but can be extended in certain circumstances or shortened if a Section 73 / 74 is presented to creditors and accepted.
Will my credit report be affected?
Yes. Commercial credit reporting agencies can keep a record of your bankruptcy on your credit report for 7 years. Any creditor wishing to obtain a copy of your credit report can request it from a credit reporting agency.
How to proceed?
If you are applying to be made bankrupt you will need to complete and lodge a debtor’s petition and a statement of affairs. We can assist you with this. If you have been made bankrupt by a creditor petition (sequestration order) you must complete a statement of affairs and lodge it with the Trustee within 14 days of notification.