Expert Bankruptcy Services for Financial Relief and Recovery

Bankruptcy is a legal process where a bankruptcy trustee is appointed to administer an insolvent person’s affairs to provide for a fair distribution of that person’s divisible assets to their creditors. 
Bankruptcy is a legitimate and just way for a debtor to resolve their debt problems, and it is one way for creditors to take action against someone for their unpaid debts.

Although bankruptcy can provide relief if you are unable to repay your debts, there are consequences that may affect you. Make sure you are aware of these consequences can help you decide if this is the best option for you.

Some of these consequences can include:

- Bankruptcy does not release you from all debts
Most unsecured debts are covered in bankruptcy - this means you no longer have to repay these debts. There are some exceptions. 

- Bankruptcy affects your ability to travel overseas.
You must request permission from your trustee to travel overseas. It's an offence to travel overseas without consent in writing. Your trustee may ask for further details to consider your request.

- Bankruptcy may affect your income, employment and business.
If you earn over a set amount, you may need to make compulsory payments to your trustee. There may also be some restrictions on your employment and running a business.

When completing a Bankruptcy Form, you will need to give details of:

- your income
- your assets (things you own)
- your debts (money you owe)
- any businesses, companies and trusts that you're part of
- any court cases that you're involved in.
- To support the information you provide, you may need things such as payslips, Centrelink statements, bank statements, and account numbers.

If you can't pay your debts, you may be considering bankruptcy, or an alternative to bankruptcy called a 'debt agreement'. These are formal legal options available under the Bankruptcy Act 1966.

While these formal options may free you from debt, they will have serious long-term consequences. They could affect your career and your ability to get credit or loans in the future.

Explore all your options first
Before considering bankruptcy or a debt agreement, make sure you explore your other options for dealing with unmanageable debt.

Options could include:

• asking for more time to pay
  negotiating a flexible payment arrangement
  offering a smaller payment to settle the debt

Presenting a Debtor’s Petition is a voluntary act to deal with debt.  There is no minimum amount of debt that is owed to be eligible to file a debtor’s petition.
The process is relatively simple and requires the debtor to complete and file the following documents with AFSA:

• a debtor’s petition for bankruptcy
• a statement of affairs
• an acknowledgement that the debtor has read the “prescribed information”

Upon acceptance of the debtor’s petition by the Official Receiver the debtor becomes bankrupt and a bankruptcy number is allocated.  If a registered trustee has provided a “Consent to Act as Trustee” form he or she will be the trustee of the bankrupt estate.  In the absence of a “Consent to Act as Trustee” form being filed the Official Trustee is the trustee of the bankrupt estate.

Individuals, joint debtors and partnerships may also be made bankrupt by the Federal Court or Federal Circuit Court on the application of a creditor or group of creditors owed at least $5,000.  The most common foundation for this type of action is where a creditor obtains judgment on their debt which remains unsatisfied.  The creditor may then have the Official Receiver issue a Bankruptcy Notice, a demand to pay debt.  Once the Bankruptcy Notice is served on the debtor he or she has 21 days in which to comply or challenge the Notice.  Where there is noncompliance an Act of Bankruptcy occurs and the creditor may file a creditor’s petition with the Court seeking a sequestration order bankrupting the debtor.

If a bankrupt was in a partnership, the partnership is automatically dissolved unless the partnership agreement specifically stipulates otherwise.

Where there are joint debtors, whether partners or not, the joint estate shall be applied in the first instance in payment of the joint debts, and the separate estate of each joint debtor shall be applied in the first instance in the payment of his or her separate debts.

Should there be a surplus in any of the separate estates, it should be dealt with as part of the joint estate. If there is a surplus in the joint estate, it should be dealt with as part of the respective separate estates in proportion to the right and interest of each joint debtor in the joint estate.