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.