5. Voluntary Bankruptcy

5. Voluntary Bankruptcy

Pg 11 - 20 (Personal Insolvency Information Booklet)

If you are unable to pay your debts and cannot come to suitable repayment arrangements with your creditors, you may voluntarily lodge a petition to become bankrupt.

Your petition for bankruptcy may not be accepted if it appears from the information that is lodged with the petition that you are likely to be able to pay your debts, AND you are either avoiding payment of a particular debt/s, or have been previously bankrupt.

A debtor is ineligible to present a debtor’s petition for bankruptcy if they are not in Australia or do not have an Australian connection (eg. the debtor does not usually live in Australia nor does the debtor carry on business in Australia).

The consequences of bankruptcy are serious.

Bankruptcy generally lasts for a period of three years but can be extended in certain circumstances. There is a permanent record of the bankruptcy on the National Personal Insolvency Index (an electronic public register which can be accessed by anyone for a fee). Creditors are notified of your bankruptcy.

A trustee is appointed to administer the bankruptcy. In order to pay creditors, your trustee will:

sell your assets (although you will be able to keep certain types of assets)
recover any income you earn over a certain limit
investigate your financial affairs and may recover property that you have transferred to someone else for inadequate consideration prior to your bankruptcy or which you may receive during the period of your bankruptcy.

You can choose to appoint a registered trustee by obtaining and providing their consent when you lodge your petition to become bankrupt. If you do not choose a trustee, ITSA may arrange for a registered trustee to be appointed. Otherwise, the Official Trustee is initially appointed to administer your estate. Your creditors may choose to change the trustee at any time.

The duties of a trustee are specified in legislation and trustees have to adhere to certain standards while administering your estate.

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