Bankruptcy and Insolvency Act
Bankruptcy Act 1966
If you or someone you know is facing bankruptcy then it pays to know the law that will govern the process. In Australia the law that governs bankruptcy and insolvency is the Bankruptcy Act 1996.
An Overview of the Bankruptcy Law
Bankruptcy is a process that occurs when a debtor is not able to meet the repayment of their debts and they either declare voluntary bankruptcy or a creditor initiates the process in the courts in an attempt to recover their money. The law in Australia protects you by providing a process to enable you to find a workable solution for both you and your creditors. Bankruptcy is a last resort for most people and it occurs when all other attempts to resolve the matter have failed. So in effect, the bankruptcy act helps resolve debt problems under a legal framework.
Summary of the Legal Process
Filing for bankruptcy in Australia is available only to Australian residents living in the country and people who own a home or business in Australia. There is no limit on the amount of debt and there is no exclusion based on your income. Bankruptcy lasts for three years, if you meet all your obligations under the act.
Like most legal processes, bankruptcy is complex. The first step in filing for bankruptcy is to engage the services of a registered Trustee who understands the act and will guide you through the process. Next you will be required to file an application for bankruptcy with ITSA, the government body that deals with bankruptcy in Australia. This commences the bankruptcy process.
Depending on your circumstances, you may be required to make payments to creditors during the process. This depends on how much you earn and what assets you own. You may be required to sell assets to service your debts. There may be other restrictions such as holding certain licenses or being a director of a company. If you do not obey the law then, as is the case with breaking any law, you could face serious consequences.
You can find more information about the bankruptcy and insolvency act at the ITSA website.