How Bankruptcy Works

There are two main types of bankruptcy, voluntary and involuntary.

• Voluntary bankruptcy is a decision you can make if you have unmanageable debts and there are no other options available. You will present a bankruptcy petition to the courts outlining all your income, outgoings, debts and assets. It is important that you are 100% honest and accurate with your bankruptcy petition.
• Involuntary bankruptcy can be issued by one of your creditors when you cannot afford you debt repayments. Your creditors will present a bankruptcy petition to the courts.

The courts will examine your bankruptcy petition and decide whether or not to issue a bankruptcy order and appoint an official receiver / bankruptcy trustee.

What will the receiver / trustee require?

• An inventory of all your estate
• Access to all your possession (including your house if you are a home owner)
• Any books or records relating to your estate
• Accounts for the last 3 years if you ran a business
• Notification of property acquisitions and income increases

This is only an overview and there are likely to be more obligations required of you. It is important to speak to a professional debt advisor for a full list of requirement.

Remember: Bankruptcy is a legal process so failure to comply with any of these obligations may result in legal proceedings.

What happens next?

Usually your assets will be sold to provide payment to your creditors. If your creditors are not paid the full amount you owe them then the shortfall will usually be written-off but in some cases you will continue to pay your creditors a percentage of your income for up to 3 years after being made bankrupt.

Any information you provide will be kept completely confidential.