What you need to know about bankruptcy
Bankruptcy is a formal court procedure which occurs when an individual does not have enough money/assets to pay creditors or debt that is owed. Bankruptcy involves a formal process and you must be deemed eligible for it. If you are declared bankrupt, a majority of your assets will go under the control of a “trustee in bankruptcy”, to be sold and pay creditors what they are owed. You will often be, however, allowed to keep personal belongings.
Important things to know about bankruptcy:
• There is no minimum amount you need to owe before you can go bankrupt.
• There is a seven day ‘cooling off’ period when you apply for bankruptcy in which you can change your mind.
• The bankruptcy period last for three years from the date of filing, although this period can be extended to 5 or even 8 years upon objections being lodged.
• You are responsible for all debts incurred after bankruptcy.
• Your bankruptcy can be annulled by your bankruptcy trustee after certain requirements have been met.
• Your name will be listed as being bankrupt for seven years from the start of your bankruptcy- on the National Personal Insolvency Index (an electronic public register which can be accessed by anyone for a small fee) – and this will most likely affect your credit rating.
How can I become bankrupt?
There are two ways that a person can become bankrupt:
1. Involuntary bankruptcy – through a sequestration order- which is made by the court on the application of a creditor; this means that the debtor becomes bankrupt. Sequestration, in law, is the act of removing, separating or seizing property from the possession of its owner under the process of law to repay debt that is owed.
2. Voluntary bankruptcy – this is where the debtor presents the Official Receiver with a petition, if there is no pending application by a creditor to bankrupt the debtor and if the petition is accepted, the person becomes bankrupt.
What are the alternatives?
However, there are other options before filing for bankruptcy. These include:
• Come to a private informal arrangement with individuals creditors
• Come to a private agreement with creditors
• Enter into a private agreement or
• Proposing a debt agreement
Bankruptcy generally does not prevent you from working, your employer is not normally notified of your bankruptcy, unless you owe him or her money. If you are engaged in particular trades or professions there may be certain restrictions imposed by professional associations or licensing authorities. Your professional association or licensing authority should be contacted to confirm whether there is any effect on your membership or ability to practice a particular trade.
Always seek help and advice from a professional. Here at The Quinn Group, the dedicated team of lawyers and accountants at can assist you with advice and assistance for your bankruptcy needs. Contact us now by submitting an online enquiry or call us on 1300 QUINNS (784 667) to book an appointment today.