Many Australians are unaware that there are actually two types of bankruptcy; voluntary and involuntary. It’s important to know the difference because each one affects what happens with not only your debts and assets but your rights and responsibilities as well.
Involuntary bankruptcy happens when you owe money to an individual or institution who you are unable to repay, in which case they then involve the court to declare you bankrupt in an attempt to recover their money. In most cases, this will result in your being issued with a notice requesting that you repay all the owing debt within 21 days.
If you fail to do so, the creditor will then go back to the court and ask them to supply a sequestration order that proclaims you insolvent. During this time, you will have a brief window in which you can argue your case, why it should not escalate any further and the reason why you should not be declared bankrupt. Once the determination has been made, however, you will be made bankrupt and will need to take the same steps as those who declare bankruptcy voluntarily.
In both voluntary and involuntary bankruptcy, the period usually lasts for 3 years and 1 day. Throughout that time, there are certain conditions that need to be met such as providing all the details of your debts to your trustee including your income and assets. Your trustee will notify your creditors of your bankruptcy which will usually eliminate those persistent, intimidating calls. Your bankruptcy conditions may also mean that you may need to make compulsory payments if your income exceeds a certain amount.
Contact the experts at Bankruptcy Debt Help to get all the information you need about bankruptcy, to help you make the right decision.