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Bankruptcy Law

Bankruptcy Law

Your inability to pay your debts as they fall due can likely result in personal insolvency. This may lead to bankruptcy or the alternatives to bankruptcy.
If you are unable to pay your debts as they fall due, there are two ways in which you can likely be bankrupted and they are:
  • You can make a voluntary application for bankruptcy.
  • A Creditor files an application at High Court to adjudicate you bankrupt.

To enter bankruptcy or for a creditor to adjudicate one bankrupt, the debt needs to be greater than $1,000.00. Bankruptcy normally lasts for three years from the date the debtor has supplied a completed Statement of Affairs, and the debtor is automatically discharged after three years is completed, assuming that there is no objection to the discharge.

Where the creditor is adjudicating the debtor bankrupt, they will first serve the debtor with a Bankruptcy Notice giving the debtor 10 working days to pay the debt or enter into a formal payment agreement, or satisfy the High Court that you have a counterclaim, set-off or cross-demand in the sum that equals or exceeds the amount claimed by the creditor, or to apply to the High Court to set aside the bankruptcy notice.

If the debt remains unpaid within the 10 working days or none of the steps as mentioned above are taken, the debtor will have committed an “act of bankruptcy”. The creditor can then apply to the High Court to adjudicate the debtor bankrupt. If successful, the debtor’s property is transferred to the Official Assignee’s custody and given to the creditors.
There are certain responsibilities and restrictions relating to bankruptcy which you must be fully aware of when faced with a challenging bankruptcy situation. Also, bankruptcy has long lasting consequences and must not be treated lightly or as an easy escape from the debts owed. We will provide you thorough advice on what those consequences are.We will further guide you in understanding the responsibilities and restrictions under bankruptcy so that you are able to make informed decisions.
It is also important to understand that there are alternatives to bankruptcy, as follows:
  • Debt Repayment Order
  • No Asset Procedure
  • A Creditor’s Proposal
To decide which option is most appropriate for you, there needs to be a careful consideration of factors such as the amount of your debts, what they relate to, the value of your assets, and whether you have used any of the insolvency options in the past.
If you are in a challenging situation of personal insolvency, contact us today. We can make an assessment of your situation and advice you of a practical outcome.