Bankruptcy
Bankruptcy is a procedure available to individuals which provides:
- Relief to a an insolvent person from debts owed, so that he or she may make a fresh start without the burden of past debts; and
- For the appointment of an independent person (the Trustee) to conduct investigations into a debtor's affairs and arrange for the sale or realisation of his or her "divisible property" and the equitable distribution of funds recovered to a debtor's creditors.
A person who is unable to pay their debts may voluntarily file for bankruptcy by filing a Debtor's Petition with the Official Receiver from the Insolvency & Trustee Service Australia ("ITSA"), which is a Commonwealth government agency. A person filing their own Debtor's Petition may appoint the Official Trustee from ITSA to act as their Trustee, or they may appoint a Private Trustee.
Creditors can also apply to Court to make a person who is unable to pay their debts bankrupt if they can satisfy the Court that the debtor owes them a debt of over $2,000 and that the debtor has committed an act of bankruptcy. A creditor who applies to Court in order to bankrupt a debtor may elect to have the Court appoint a private Trustee as the debtor's trustee, or they may elect to have the Court appoint the Official Trustee from ITSA to act as Trustee.
For further information on bankruptcy you may wish to contact one of the staff at Pearce & Heers, or alternatively further information can be obtained from ITSA’s website by following the link below.