Here’s Some Information If You’re Being Told You’re About To Be Made Bankrupt
WHAT IF I RECEIVE A STATEMENT OF CLAIM?
If you dispute the debt you will need to lodge a defence. If the claim relates to consumer credit, you may be able to lodge a dispute with a free independent dispute resolution service. Obtaining and advice is important.
If you do owe the debt and it is not a consumer credit debt, you should try to negotiate a repayment arrangement directly with the creditor. Even if they don’t agree, you can simply start paying if you have account details but keep records of all payments made.
WHAT IF I RECEIVE A BANKRUPTCY NOTICE?
You have 4 main options:
- Do nothing (and risk being made bankrupt);
- Pay in accordance with the notice (usually within 21 days);
- Negotiate with the creditor about repayments (and start paying if you haven’t already);
- Contact Roser Lawyers about opposing the Bankruptcy Notice
Failure to pay a Bankruptcy Notice is an Act of Bankruptcy which is easily proved by the creditor, and the most common way people are made bankrupt compulsorily (what’s known as a sequestration order).
You can still apply to the Court to pay the debt by installments, but this won’t necessarily stop the bankruptcy proceedings. An installment order will only prevent a creditor proceeding to make you bankrupt if you obtain before a Bankruptcy Notice has been issued.
If you receive a Bankruptcy Notice and you didn’t receive a Statement of Claim, you should obtain urgent legal advice. You may have grounds to apply to set aside the judgment or you have a set-off, in which case you will also need to lodge a Notice stating grounds of opposition to application, interim application or petition in the Federal Circuit Court in relation to the Bankruptcy Notice. You will need to show both that you did not receive the court papers and that you have a defence.
You would then need to appear in the Federal Circuit Court and the court where the judgment was obtained.
WHAT IF I RECEIVE A CREDITOR’S PETITION?
If you receive a Creditor’s Petition this is very serious. You should obtain expert advice as a matter of urgency.
There will usually be a Court date specified on the petition. It is very important that you appear before the Court. If this is impossible, you need to send something to the court explaining why you cannot come and, if possible, arranging to attend by telephone.
On the first appearance you will probably be able to obtain an adjournment to either:
- Contact Roser Lawyers; or
- Raise the money to pay the debt (for example, by selling your home or another asset, or applying for a loan).
You will be required to attend court again. The next time you attend court you will either need to have filed paperwork opposing the Creditor’s Petition (you will need legal advice to do this and you will need to have legal grounds for doing so), or proof that for example, your house is on the market (the contract for sale and agency appointment) or that a loan has been conditionally approved, or whatever it is you are doing to raise the money. The Court will only adjourn the matter a limited number of times.
You should always continue to negotiate with the creditor. You may be able to convince the creditor to discontinue the proceedings by consent, but usually only if you can pay the debt plus their legal costs. Obtaining expert advice from a lawyer who specialises in this area of law is vital.
FILE A STATEMENT OF AFFAIRS
Once you have been made bankrupt (that is a Sequestration Order has been made against you) you must file a Statement of Affairs. There are several very good reasons to do this:
- You are obliged to by law;
- A completed Statement of Affairs may be necessary for the Court to decide whether to set aside or annul your bankruptcy if this is relevant;
- The usual 3 years and 1 day until discharge from bankruptcy does not start to run until you have filed your Statement of Affairs. A free financial counsellor can assist you if you are having trouble completing the Statement of Affairs.
Should you have a matter concerning this blog or Bankruptcy do not hesitate to Contact Roser Lawyers for a confidential discussion.
Related Services