subject: How To Legally Declare Bankruptcy In Australia? [print this page] When you find yourself backed in a corner and believe that you could no longer pay off your debts, you may want to consider declaring bankruptcy. It is the process where you give up your property and control of your finances to a trustee, which may be done either by agreement with your creditors or through a court order.
You can do it on your own
There are actually two ways with which you may declare bankruptcy in Australia. First is to do it on your own accord. Through this option, you will have to fully accomplish a Debtors Petition and Statement of Affairs. The items listed on this form must be answered with utmost honesty as failure to disclose certain properties or liabilities may be meted with severe penalties including imprisonment. The said form specifies the particulars of your debt such as the names, addresses and amount you owe your creditors. It also asks you to list each and every person you owe money to without distinction as to whether such liability was acquired due to business or personal reasons. After the completion of such form and the subsequent signing of the acknowledgment portion, which states that you have read and understood the contents thereof, you may now submit it to Insolvency and Trustee Service Australia (ITSA).
Or your creditor will do it for you
The second mode is when your creditor files for your bankruptcy. The creditor will have to file the Creditors Petition, which may be filed only within six months from the date of the act of bankruptcy as defined by law was committed. The Creditors Petition will also serve as your notification on the schedule and time you are supposed to go to court for your hearing. The petitions may be filed in the Federal Court of the Federal Magistrates Court although the rules and procedures are similar. The burden here is on the creditor which must prove that you committed an act of bankruptcy.
What you can expect at the hearing
Just like what you see on TV, you will be asked by the judge or registrar about your response regarding the petition. You can either agree to the petition, you can disagree and justify your reasons, or you can ask for deferment because you need time to study your options. If you declare bankruptcy, the judge will direct a court trustee to start sequestration proceedings. This could damage your credit score and the period of the bankruptcy typically will last for three years. The trustee will then auction off your properties to settle your debts. Lastly, you cant legally borrow money from a person or institution without informing them that you are bankrupt. For more information on bankruptcy, you can log on the Insolvency and Trustee Service Australia (ITSA).
