WHAT YOU NEED TO KNOW

The discharge of bankruptcy means that the individual is no longer bankrupt. The date of discharge of bankruptcy will vary depending on the type of bankruptcy.

If an individual is made bankrupt via a Debtor’s Petition (voluntary bankruptcy) then the discharge date will be three (3) years and one (1) day following lodgement and acceptance of the statement of affairs. Given a Debtor’s Petition is voluntary bankruptcy the statement affairs is lodged along with the Debtor’s Petition to commence the bankruptcy.
In a Creditor’s Petition (involuntary bankruptcy), the statement of affairs is not lodged to start the bankruptcy. A trustee when appointed, will send a statement of affairs to the bankrupt to complete and return to the trustee. A bankrupt whose bankruptcy commenced as a result of a Creditor’s Petition will be discharged on a date three (3) years and one (1) day following the lodgement and acceptance of the statement of affairs. Accordingly, if an individual is made bankrupt involuntary via a creditors petition, it is important to complete and return a statement of affairs to their trustee as the three (3) year period will not start until the statement of affairs is lodged and accepted.
Although an individual is no longer bankrupt following discharge, the administration of the bankrupt estate may not be finalised. For example, your trustee may not have finalised investigations or the sale of assets, or you may still have income contributions to pay. A discharged bankrupt is still required to assist their trustee in relation to the administration of the estate.

Bankruptcy Period Extended – Objections to Discharge

The period of bankruptcy may be extended to five (5) or eight (8) years if a trustee lodges an objection to a bankrupt’s discharge.
A trustee would only lodge an objection if a bankrupt was not complying with their obligations under the Bankruptcy Act 1966 (Cth) (Act). The length of the extension will depend on the breach of the Act.
Some common reasons for a trustee to object a bankrupt’s discharge are as follows:

  • failure of a bankrupt to provide information/assistance to their trustee
  • failure to disclose details of actual or expected income to the trustee
  • failure to explain to the trustee how money was spent
  • failure to disclose all assets and creditors to the trustee
  • leaving and not returning to Australia when requested

An objection to discharge can be removed by the trustee if the basis of the objection no longer exists and the bankrupt is currently complying with their obligations.

For more information on corporate insolvency review the resources below or contact us today.

PERSONAL INSOLVENCY RESOURCES

PERSONAL INSOLVENCY OVERVIEW

From sudden employment and over-reliance on credit to relationship breakdowns and ill health, there are many reasons why people suffer financial hardship and experience unmanageable debt. If an individual cannot pay their debts they may and haven’t been able to reach an agreement with creditors, they may declare themselves bankrupt. Bankruptcy can either be voluntary or involuntary.

DECLARING BANKRUPTCY – WHAT’S INVOLVED?

Declaring bankruptcy voluntarily in Australia is a straight forward process and involves completing two separate forms and lodging them with the Australian Financial and Security Authority. This article outlines declaring bankruptcy in four step.

CANCELATION OR ANNULMENT OF BANKRUPTCY

Annulment is effectively the cancellation of a bankruptcy. This article outlines the three ways a bankruptcy may be annulled.

ASSETS, DEBTS AND INCOME IN BANKRUPTCY

Many people do not know what will happen to their income, debts and assets once they become bankrupt. To assist in advising those on the brink of personal insolvency, here is a broad overview of the bankrupt’s entitlement to hold on to certain assets and income during the period of bankruptcy.

BANKRUPTCY AND EMPLOYMENT

While bankruptcy doesn’t directly affect your employment, it may have consequences if you hold various licences or qualifications including building, property management, liquor and financial brokerage licences.

BANKRUPTCY AND HOUSES

If an individual is made bankrupt, it is not necessarily the case that their house will be sold from under them. Given that in most bankruptcy cases we are dealing with the family home, it pays to have knowledge in this field to provide the best outcome for your client and hopefully “save the house”.

BANKRUPTCY FAMILY TRUSTS

Family assets are commonly protected by the use of a structure named a discretionary trust (sometimes referred to as a ‘family trust’). This type of trust provides a firewall of protection for family trust assets.

PERSONAL INSOLVENCY LEGAL ACTION

There are many ways a creditor can seek to recover payment of a debt from an individual who cannot, or refuses to, pay that debt. This article covers the rights and obligations of individuals facing debt collection and exposed to legal action and enforcement.

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