Bankruptcy can be a complex area which is why asking questions can help to dispel false bankruptcy myths and assist with understanding the process. Below are the top 5 questions we come across in bankruptcy matters:
What effect does Bankruptcy have on someone’s life?
During the period of bankruptcy, an undischarged bankrupt is required to comply with the following:
- Cannot act as a company officer;
- Must surrender their passport to the trustee;
- Any travel overseas must be approved by the trustee;
- Cannot trade under an assumed name or registered business name without disclosing they are a bankrupt;
- Cannot incur credit above the prescribed threshold without disclosing they are a bankrupt; and
- Must assist the trustee with identification of assets and investigations
Will I lose all of my assets?
A person subject to personal insolvency is entitled to maintain some personal effects such as household furniture, clothing and financial assets, such as superannuation and life insurance policies, providing the superannuation fund is regulated.
Certain assets, such as tools of trade and motor vehicles, have a threshold value. The value of these assets, over the threshold, will be realisable by the Trustee. For information on the current threshold amount/s please contact us.
Each individual’s circumstances are unique. In the event you have Property you should contact a qualified professional to discuss your options.
Can a bankrupt retain their ABN and run a business?
A bankrupt can continue to run a business, however, restrictions do apply. All businesses must be in the name of the bankrupt and not registered under any trading names, unless that name is accompanied by the bankrupt’s name.
If a bankrupt continues to run a business as a sole trader, it is recommended they contact the Australian Taxation Office to either register a new ABN or separate their pre-bankruptcy debt.
Can a bankrupt borrow money?
There are restrictions on the amount of credit that can be obtained. When obtaining credit over the threshold, the individual is required to disclose that they are subject to personal insolvency.
For information on the current threshold amount/s please contact us.
How does a bankruptcy finish?
Bankruptcy generally lasts for a period of three years and one day from the date that the Statement of Affairs is lodged
A bankrupt may end their bankruptcy prior to the three year mark, should they elect one of the following three options:
- All creditors and costs of the estate are paid in full, resulting in an annulment;
- A proposal under Section 73 of the Bankruptcy Act 1966 is accepted by creditors for the compromise of their debts; or
- The Court terminates a sequestration order, if they determine it was obtained unjustly.
Shaw Gidley are experts in restructuring, turnaround and insolvency and provide free initial advice on these matters. Please contact our offices on (02) 4908 4444 or (02) 6580 0400.