Rodgers Reidy is Australasia’s largest advisory consultancy specialising in corporate and personal insolvency, bankruptcy, recovery and forensic accounting.
Going bankrupt is a last-resort action to help you deal with extreme financial distress. While bankruptcy can have a negative connotation, in certain circumstances the opportunity to start afresh without the stress of debts and creditors looming over you can be liberating.
‘Safe harbour’ legislative changes designed to support and encourage entrepreneurs who act in good faith to re-engage in business sooner have further reduced the stigma associated with bankruptcy.
Bankruptcy is a legal process that protects individuals who are unable to pay their outstanding debts or come to a repayment agreement with creditors. While it imposes certain obligations and restrictions on you, the process of bankruptcy may be the best way for you to be released from most debts.
There are two types of bankruptcy:
- voluntary bankruptcy, where you apply to become bankrupt, and
- involuntary bankruptcy, where a creditor whose debt is $5,000 or more files a creditor’s petition at court for an order that you be made bankrupt.
An independent person - either a registered trustee, or the Official Trustee, who is the representative of the Australian Financial Securities Authority (AFSA) - is then appointed to manage the person’s financial affairs.
There are many options available to you before declaring bankruptcy, so it is vital that you get expert advice from an experienced, independent advisor to examine all your options and obligations.