Bankruptcy

What is bankruptcy?

Bankruptcy is an option if you are:

• unable to pay your debts, or
• suffering financial hardship.

Bankruptcy will affect you in the following ways:

• you will be released from your provable debts
• an independent person (the bankruptcy trustee) will be appointed to arrange the sale of your property and, from the funds recovered, pay your creditors.

There are two ways you can become bankrupt:

• you can present a debtor’s petition (voluntary bankruptcy), or
• a creditor makes an application to the court to make you bankrupt (involuntary bankruptcy).

Voluntary bankruptcy (when you decide to become bankrupt)

If you are unable to pay your debts and cannot come to an arrangement with your creditors, you may decide voluntarily to lodge a petition to become bankrupt (a debtor’s petition).

Involuntary bankruptcy (when your creditors make you bankrupt)

If you are unable to pay your debts, have been unable to enter into an agreement with your creditors and haven’t voluntarily made yourself bankrupt, a creditor to whom you owe $5,000 or more may apply to the court to have you made bankrupt.