Annulment of Bankruptcy Or Cancelation of Bankruptcy
Annulment is effectively the cancellation of a bankruptcy. There are three ways a bankruptcy may be annulled:
- The bankrupt’s debts are paid in full, including interest, the realisations charge and your trustee’s expenses and fees. This may be a result of the trustee realising sufficient assets to clear all debts or funds to pay or debts may be provided by a third party such as relative. The Trustee will be in a position to provide details of the amount of funds needed to pay all debts.
- The bankrupt offers and creditors accept a composition or arrangement, which is an offer of something less than payment in full. A composition may involve additional assets or monies being provided that would not usually be available in the bankruptcy. The major benefit of this offer is that a dividend will be paid to the bankrupt’s creditors that would otherwise not be available. The offer to creditors is made via the trustee and the bankrupt should discuss the other with the trustee prior to providing the final offer. A composition is made pursuant to section 73 of the Bankruptcy Act.
- A bankrupt may apply to the court to set aside their bankruptcy if they believe that they should not have been made bankrupt or should not have lodged a debtors petition.
What happens after annulment?
The bankrupt’s name will appear on the public record (National Personal Insolvency Index) forever, with the record showing that the bankruptcy was annulled. Credit reporting organisations also keep records of bankruptcies for seven years. Other consequences of annulment are:
- Surplus assets following the deduction of the trustee’s remuneration and expenses will be returned to the bankrupt.
- Creditors to whom the bankrupt has granted security over assets (eg a mortgages) will still have their rights in relation to those assets, which may include the power to seize and sell them if the bankrupt defaults on repayments
- A bankrupt is still liable for the payment of debts that are not provable in bankruptcy. See bankruptcy overview for more details.
For more information on annulment of bankruptcy or specific insolvency services, contact the team at Rapsey Griffiths on (02) 4929 3019 for a confidential consultation.