Bankruptcy is a statutory mechanism available for individuals experiencing several financial difficulties. It is the option selected generally as a last resort, when it is no longer possible to informally deal with the person’s creditors, or an other formal arrangement under Part IX (nine) or X (ten) of the Bankruptcy Act cannot be achieved.
There are numerous implications for a person going bankrupt, including:
- creditors are unable to commence / continue legal recovery of their debts;
- most significant assets are sold for the benefit of creditors;
- higher income earners may be required to make compulsory payments to their bankruptcy trustee for each of the three (3) years of their bankruptcy; and
- ramifications for professionals whose qualifications may be impacted.
There are often misconceptions about the effect of bankruptcy, for example:
- bankrupts are generally allowed to retain all of their household furniture and effects;
- bankrupts are allowed to retain a motor vehicle and tools of trade up to certain values;
- superannuation is generally retained by the bankrupt; and
- bankrupts do not get imprisoned for simply not paying their debts.
Before anyone enters bankruptcy, they should obtain expert advice and consider all other available options, as in many circumstances there are other options available that avoid bankruptcy.
For further information regarding Bankruptcy please contact our office.
Whether you are looking for help with your company, business or personal affairs, we can help you find a solution for your financial problems.