Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. While many people feel there is a stigma attached to bankruptcy and it is publicly advertised, it should always be considered when dealing with individual insolvency cases.
Bankruptcy should be avoided at all costs if one’s assets are sufficient to defray one’s liabilities or enable a compromised settlement to be reached. However, in cases where an individual’s assets do not satisfy their debts, there may be no other option.
The effects of bankruptcy
Once you are bankrupt all your assets come under the control of the Trustee or Official Receiver (“OR”), including your home. If the property is jointly owned, the joint owner/s may be able to make an offer to buy out your interest in the property from the OR or the Trustee.
The other main disadvantages of bankruptcy are the restrictions placed upon you and the stigma always associated with bankruptcy.
Can my bankruptcy be reversed or cancelled?
Yes, you can apply for a reversal or annulment at any time if:
- The bankruptcy order should not have been made, for example because the proper steps involved in obtaining the order were not followed; or
- All your bankruptcy debts and the fees and expenses of the bankruptcy proceedings have been either paid in full or guaranteed to the satisfaction of the court; or
- You have reached an agreement with your creditors to repay all or part of your debts.
What is annulment of a bankruptcy, when and, how do I apply and what is the effect?
This is a procedure which cancels your bankruptcy; annulment is a court initiated process and can only be achieved if all your debts are paid or secured to your creditors’ satisfaction and the OR or your Trustee makes an appropriate report to the court. You can apply for annulment at any time if any one of the conditions described above applies. Once annulment is obtained you will revert to your pre-bankruptcy status.
What does being discharged from bankruptcy mean?
It is a process which frees you from the restrictions of bankruptcy and releases you from the debts you owed at the date the Receiving Order was made against you.
Can I propose a Scheme of Arrangement to my creditors after a bankruptcy order?
Yes you can, we at CRI can guide you through all statutory procedures necessary to obtain an annulment or discharge of your bankruptcy or assist you in putting together a Scheme of Arrangement to your creditors.