Personal Insolvency and Bankruptcy
- Personal Insolvency Overview
Personal insolvency in Australia is regulated by the Bankruptcy Act 1966 (Cth) . A person is insolvent when they can't pay all their debts at the time those debts are due for payment. In that situation, the person may need to consider some legal arrangement to deal with their insolvency. The... Read More »
- Personal Insolvency Agreement
Part X Personal Insolvency Agreements (“PIA”) provide a debtor in financial difficulty with a formal mechanism where they can come to a binding arrangement with their creditors and avoid bankruptcy. They are an important feature of the personal insolvency system because: Creditors have the opportunity to make commercial decisions about how they will best receive money... Read More »
- Debt Agreements
Part IX (Debt Agreements) was introduced into the Bankruptcy Act in 1996 with the aim of providing low income debtors and their creditors with an informal and inexpensive alternative to bankruptcy and the more formal and expensive Part X Arrangements. In summary, Part IX provides for an insolvency debtor to give the Official Trustee a proposal... Read More »
- Acts of Bankruptcy
How is a Bankruptcy Commenced? All bankruptcies are based on a petition for bankruptcy, which can be presented by either the debtor or the creditor. Debtors can file their own petition for bankruptcy with the Official Receiver and upon acceptance of that petition by the Official Receiver, the debtor becomes a bankrupt from the first moment of... Read More »
- Trustees
Who Can Act as Trustee The trustee can be either: a private individual (usually an accountant) known as a "registered trustee", or if no registered trustee has consented to act, a government institution known as the Official Trustee. The Official Trustee is a corporation which has perpetual succession and the capacity to deal... Read More »
- Obligations of the Bankrupt
Section 77 requires a bankrupt to: Forthwith deliver to the trustee all books (including books of an associated entity) that are in his possession, along with his passport. Attend on the trustee whenever the trustee may reasonably require. Provide information to the trustee about any of the bankrupt’s conduct and examinable affairs. Attend meetings... Read More »
- Priorities
The provisions that govern the order of payment of the debts of a bankrupt are contained in s 108 to 114 of the Bankruptcy Act . Except as provided for under the Act, all debts proved in the bankruptcy rank equally and are to be paid proportionately (s 108). Section 109 establishes the order of... Read More »
- Discharge and Annulment
Discharge from Bankruptcy Generally, three years from the date on which the bankrupt files his statement of affairs with ITSA the debtor is automatically discharged from bankruptcy. The trustee may object (ss 149B, 149Q), in which case, unless the objection is withdrawn or cancelled, the term of the bankruptcy can be extended by either a further two... Read More »
- Offences
The provisions that govern offences are contained in ss 263 to 277 of the Bankruptcy Act . The most notable of these are: Concealment of property with the intent to defraud creditors - s 263 Wilfully making a false statement in an affidavit - s 263A Failure of bankrupt or debtor to disclose... Read More »