How to Go Bankrupt and Get Rid of Your Debts

What does it mean to go bankrupt?

If you are unable to come to an agreement with your creditors about repaying your debts then you may be looking at a situation where Bankruptcy becomes a serious option. Formally the definition of a bankruptcy is when a person becomes insolvent or when they are unable to pay their debts as and when they fall due and payable. When a person becomes bankrupt, a trustee is appointed to their case and the trustee has to perform various functions. The trustee will sell any eligible assets which you have in order to pay off creditors, although there are a number of types of assets which you can keep. The Trustee will also apportion a certain amount of your income is you earn over a certain amount and if you have given away your assets to other people for free, they may be able reclaim some of these assets.

What do I need to do?

Basically you have three different options if you are constantly under pressure from your creditors to pay their debts. The first is a Debtor Petition, the second is a Part IX Debt Agreement and the third is a Part X Personal Insolvency Agreement. If you are choosing to become bankrupt you need to file a debtor’s petition. This is done usually by getting the consent of a Bankruptcy Trustee, but if this consent is not provided, then you will probably have the Insolvency Trustee Service of Australia appointed as your trustee in Bankrutpcy. When you file the debtor’s petition you need to also file a statement of affairs which truthfully discloses your financial position including all debt.

When you are bankrupt there are a few obligations you have such as notifying your trustee of any change of address, travel, change in income or assets and you have a general obligation to cooperate with your trustee and provide information when requested. If this is not done there are serious penalties. Also, if you borrow money you need to tell the lender that you are an undischarged bankrupt. You need approval from a court to be a director of a company and must disclose your bankruptcy to everyone you deal with and you cannot be in a partnership. There are also certain professions and occupations which you cannot undertake if you are an undischarged banrkupt and a trustee can prevent you from pursuing legal actions.

Where can I get advice?

We have lawyers online available now who can assist you with any bankruptcy problem which you may be encountering. Please click below to obtain their advice.

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