In the September quarter of the year alone, Australia saw 5,677 new bankruptcies. Bankruptcy occurs when an individual does not have enough money or assets to pay their debts, and is entered into by a formal process. Only individuals can be declared bankrupt – when a company enters a similar state it is termed ‘insolvent’ and may face liquidation.
What is Bankruptcy?
The period of a bankruptcy is 3 years and one day from the date a statement of affairs is filed or from the date of bankruptcy as determined by the Court. This period may be extended by an objection entered by the trustee, which could result in the bankruptcy period being extended to 5 years or even 8 years. The period may extend to 5 years if a bankrupt:
- makes a void transfer against the trustee – any under-valued transactions and preference payments
- continues to manage a corporation
- engages in misleading conduct
- fails to disclose to the trustee a liability that existed at the date of bankruptcy
- fails to notify a change of address or daytime telephone number
- fails to advise the trustee of any material change to the information disclosed on their statement of affairs
- fails to attend a creditors’ meeting without written approval from the trustee
- fails to attend an interview or examination
- fails to disclose any beneficial interest in any property
- leaves Australia without the written permission of the trustee and does not return (five years additional once they return to Australia)
It may extend to 8 years from the date of filing a statement of affairs if a bankrupt:
- makes a void transfer against the trustee, which includes transfers to defeat creditors
- fails to provide details of property and income when requested
- deliberately provided false or misleading information to the trustee after the date of bankruptcy
- fails to disclose details of income or expected income
- fails to pay contributions as assessed
- fails to adequately explain how money was spent or assets were disposed of
- fails to disclose a liability that existed at the date of bankruptcy
- fails or refuses to sign a document when required
- intentionally fails to disclose to the trustee a beneficial interest in a property
Throughout the term of bankruptcy the following restrictions are placed on the bankrupt:
- They may keep and use tools of trade valued up to $3,500
- They may keep a vehicle valued up to $7,050
- They can earn up to the following –
- $47,265 without dependants
- $55,773 with 1 dependant
- $60,027 with 2 dependants
- $62,390 with 3 dependants
- $63,335 with 4 dependants
- $64,280 with more than 4 dependants
The team of lawyers and accountants at The Quinn Group are available to offer advice on a range of credit and debt situations from negotiating with creditors and debtors to administering the bankruptcy if that is required. For more information and advice contact us on 1300 QUINNS or make an online enquiry.
