21/02/10 Article 1002 - Debt Recovery, Bankruptcy and Insolvency
Applying To Make An Individual Bankrupt – A Practical Overview For Failure To Comply With Bankruptcy Notice
It is possible through the bankruptcy process for a person or company who have an outstanding debt owed to them by an individual (as opposed to a company) to ask the Federal Magistrates Court or Federal Court to bankrupt the person. After a bankruptcy notice has been served and the debtor fails to make payment within 28 days, then you can issue a Creditor’s Petition. The failure to comply with the Bankruptcy Notice amounts to an act of bankruptcy. Any application for bankruptcy needs to be made within 6 months of that failure.
The rules in the Federal Court and Federal Magistrates’ Court are the same but the filing fees are cheaper in the Federal Magistrates Court. Before filing, a search needs to be undertaken to make sure the debtor is not already an undischarged bankrupt. The petition is then filed together with an affidavit supporting the information in the petition, of the search and of service of the Bankruptcy Notice. All these forms can be found on the website of the Federal Magistrates Court.
The documents have to be completed accurately otherwise the petition can fail. Simple mistakes such as not spelling a name correctly or mis-stating amounts owed can lead to failures. You can request that a private registered trustee act as the trustee of the bankrupt estate by including a signed consent form from the private trustee. If no consent is obtained the official receiver (ITSA) will act as the official trustee. After the documents are filed, the return date is usually set down for three weeks from the date of filing the petition, this allows enough time for service of the petition and other matters to be completed. The registry will complete a checklist for the file to confirm all matters have been attended to and there are no mistakes on the face of the documents. If any errors are identified, steps are needed to correct the errors if possible.
If you have any debtors that are failing to make payment to you, then we can assist you in chasing those debts and discuss not only bankruptcy, but all processes available to you to recover your money.
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