For an individual with unmanageable debts, bankruptcy can be a pathway to financial recovery.
If an individual wishes to become bankrupt voluntarily, he or she does so by lodging an application referred to as a debtor’s petition with the Australian Financial Security Authority (“AFSA”). AFSA is the government regulator of personal insolvencies. Woodgate & Co. can assist with the preparation and lodgment of a debtor’s petition.
Bankruptcy can also be initiated by a creditor to whom the individual owes money. A creditor with a debt in excess of $5,000 can file a creditor’s petition and following an Order by the Court, the individual will be made bankrupt.
At the commencement of the bankruptcy the individual is required to complete a detailed questionnaire, known as a Statement of Affairs. A typical bankruptcy lasts for three years from the date the bankrupt lodges the completed Statement of Affairs with AFSA.
Once an individual is made bankrupt, a Trustee will be appointed to the estate to administer the individual’s financial affairs. The Trustee is required to act in the interests of creditors generally and is responsible for ensuring that the individual complies with their obligations under the law. If the bankrupt estate is without funds, then the Official Receiver will be appointed. AFSA will then administer the estate.
Once made bankrupt, an individual is subject to a range of restrictions including being:
These restrictions can have a significant impact on an individual, so bankruptcy should only be considered in cases when alternative options have been exhausted.
However, a bankruptcy can end in less than three years, in circumstances where the bankrupt and their creditors come to an agreement pursuant to Section 73 of the Bankruptcy Act.
If you are facing unmanageable debt or if you are attempting to recover funds to no avail, contact Woodgate & Co. for reliable and relevant bankruptcy advice.