When dealing with the more intricate and complex issues surrounding bankruptcy and the Bankruptcy Act 1966 people often need to take a step back to understand “What is Bankruptcy?

Bankruptcy is personally insolvency where you are unable to pay your debts as and when they fall due.

When a person enters into Bankruptcy they are put into a specific legal position in accordance with the Bankruptcy Act 1966 (Cmth) which means that:

  • Most (not all) creditors cannot go after them for outstanding debts or payments.

This is pursuant to Section 58(3) of the Bankruptcy Act 1966 which says that – “Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:

(a)  to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or

(b)  except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.”

  • Various financial and legal restrictions are place on a person who has become a declared bankrupt.
  • The above sections deal with these issues of dealing with a bankrupts property and assets.

 

For a person to enter into bankruptcy is not a decision that should be taken lightly since there can be many legal commitments and obligations that a declared bankrupt must adhere to. Therefore it is wise to obtain professional legal advice before entering into bankruptcy.