Bankruptcy & Insolvency FAQs
What is bankruptcy?
Bankruptcy is a process whereby you are afforded protection if you cannot repay your debts or if you cannot reach a suitable agreement with your creditors.
Why should you consider bankruptcy?
Bankruptcy will protect both your creditors and yourself. You will be protected from dealing directly with creditors, while the interest of creditors is also protected by assigning an independent trustee to handle the financial affairs of the bankrupt person.
How does a person become bankrupt?
You can choose to declare bankruptcy if you are unable to repay your debts. If a creditor applies for bankruptcy you can repay them.
What are the responsibilities of a bankruptcy trustee?
He or she will need to investigate the financial affairs of the bankrupt person in order to find money to repay creditors were possible and report any offences.
Which debts are not protected under bankruptcy?
There are certain debts that you will still be liable for, even if you have been declared bankrupt.
These debts include:
- maintenance debts
- child support debts
- court-imposed penalties
- student loans
- debts as a result of fraud
What is a company liquidation?
A company’s liquidation essentially means that the company has been wound up or it ceases to exist. A liquidator will be appointed and he or she will represent the interests of all creditors.
What is creditors voluntary liquidation?
This process will occur when the company’s owners or shareholders agree that the company is no longer able to repay its debt. This allows for a systematic process where a liquidator will be appointed to ensure that the liquidation process is conducted appropriately and according to all Australian bankruptcy laws.
What is an official liquidation?
This is when a creditor submits an application for a company to be closed down due to the fact that they are unable to repay their debt.
How does an official liquidation end?
Once a company’s assets have been realised and all open investigations have been completed, the liquidator will apply for the company to be deregistered. When this happens, creditors will no longer have the ability to claim against the company.