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Interim Relief
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Interim relief: suspension of creditor enforcement by presenting a declaration of intention to become bankrupt
If you have unmanageable debt and need time to consider your options, you may apply for temporary protection from enforcement action by your unsecured creditors for up to a period of 21 days. This temporary relief allows you to negotiate payment arrangements with creditors or alternatively, consider a formal insolvency administration (Debt Agreement, Personal Insolvency Agreement or Bankruptcy) that may be suited to your circumstances.
The fact that you have availed yourself of this interim relief from creditor enforcement action is not recorded on the National Personal Insolvency Index (public electronic register of all personal insolvencies), however your creditors are notified of the stay on enforcement action and provided with a copy of your financial affairs.
You do not automatically become bankrupt after the 21 day stay period, however if you have not come to a suitable arrangement with your creditors and you do not voluntarily apply to become bankrupt, your creditors can choose to apply to the court to make you bankrupt.
You are able to apply for this interim relief if:
- You have not applied for this interim relief in the preceding 12 months
- You have not signed a Controlling Trustee Authority within the preceding six months (proposed a Personal Insolvency Agreement to your creditors)
- You are not currently under a Debt Agreement, Personal Insolvency Agreement or the subject of a current Controlling Trustee Authority
- A creditor has not already petitioned for you to be made bankrupt
- You have a residential or business connection to Australia (you are living in Australia or conduct business in Australia)
Effect of this interim relief:
- Most of your unsecured debts are ‘frozen’ for the 21 days stay period and these creditors cannot continue with any enforcement action (eg garnisheeing your wages or seizing your property)
- Some unsecured creditors are not bound by this stay period and they may continue recovery action (eg if you owe child support debts or fines/penalties imposed by a court in respect of an offence against a law)
- Secured creditors are also not bound by this stay period (eg Child Support debts, court imposed fines/penalties and HELP debts)
You should note that the 21 day stay period can end earlier if:
- A creditor petitions the court to make you bankrupt and/or the court makes you bankrupt during this period
- You sign a Controlling Trustee Authority (propose a Personal Insolvency Agreement) during this period
- You voluntarily apply to become bankrupt during this period
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