BANKRUPTCY LAWYERS
Ramsden Lawyers advised individuals, directors, and business owners on bankruptcy, insolvency, and related financial matters in Brisbane, the Gold Coast, Sydney, and Melbourne.
Our bankruptcy lawyers provide clear, practical advice on your position and the options available to you under the Bankruptcy Act 1966 (Cth) (Act), whether you are considering bankruptcy, responding to creditor action, or seeking to resolve financial difficulties through alternative arrangements.
Bankruptcy Advice and Representation
Our bankruptcy lawyers assist clients at all stages of the bankruptcy process, including before proceedings commence, during administration, and following discharge.
We regularly advise on:
- Personal insolvency options
- Responding to bankruptcy notices and creditor’s petitions
- Applications to set aside or challenge bankruptcy proceedings
- Asset recovery and asset protection issues
- Negotiations with creditors and repayment arrangements
- Bankruptcy disputes and litigation
Our approach is to provide direct advice so that you understand your position and can make informed decisions.
What Is Bankruptcy?
Bankruptcy is a legal process that applies when an individual is unable to pay their debts as they fall due.
In Australia, bankruptcy may arise in two ways:
- By filing a Debtor’s Petition, or
- By order of the Court, following the action taken by a creditor
Once bankruptcy commences, a trustee is appointed to administer the bankrupt estate in accordance with the Bankruptcy Act 1966 (Cth).
The Bankruptcy Process
Following the appointment of a trustee in bankruptcy, the administration of the estate generally involves:
- Carrying on the business of the bankrupt individual where it remains financially viable, or otherwise winding up the business
- Realising (selling) assets and distributing funds to creditors in accordance with the priorities set out in the Bankruptcy Act 1966 (Cth)
- Recovering assets transferred prior to bankruptcy to avoid repayment obligations
- Monitor the income of the bankrupt, where the individual is required to make contributions from their income in an effort to repay creditors, and lodge an objection to discharge where the individual is not meeting those requirements
- Reporting offences or non-compliance to the Australian Financial Security Authority (AFSA)
- Providing a report to creditors containing an estimate of the returns they will receive.
Alternatives to Bankruptcy
Bankruptcy is not always the most appropriate course. In many cases, alternative arrangements can be explored depending on your financial circumstances such as informal agreements, debt agreements and personal insolvency agreements.
INFORMAL AGREEMENTS
In some circumstances, our bankruptcy lawyers can negotiate with creditors on your behalf to arrange repayment of certain debts over an agreed period, essentially through a structured payment plan. Negotiating Informal Agreements is a complex legal process that requires professional expertise to manage effectively. Our lawyers work to develop realistic, manageable, and commercially attractive proposals that increase the likelihood of creditor acceptance, whether through a reduced settlement amount or an extended repayment timeframe.
Although Informal Agreements are not legally binding in the same way as formal insolvency arrangements, creditors will often request full disclosure of your financial position, including details of all outstanding debts and other creditors. This allows them to assess whether the proposed arrangement is reasonable. It is also important to understand that while Informal Agreements may help you avoid bankruptcy and its associated stigma, your credit rating is still likely to be negatively impacted.
DEBT AGREEMENTS
In certain circumstances, bankruptcy can be avoided through alternative forms of debt relief. A Debt Agreement under Part IX of the Bankruptcy Act allows individuals experiencing financial distress to enter a formal arrangement with their creditors. This option is typically used by insolvent individuals with relatively lower levels of debt and fewer assets.
Ramsden Lawyers regularly advises individuals on whether a Debt Agreement is appropriate in their circumstances. Where suitable, we assist with negotiating terms and guiding clients through the process of entering into and managing a Debt Agreement.
A proposal for a Debt Agreement must clearly set out:
- the debtor’s details
- the proposed repayment offer
- the debtor’s financial position, including income, expenses, assets, and liabilities
- a formal statement of affairs
There are important eligibility requirements. An individual cannot enter into a Debt Agreement if:
- they have been bankrupt within the last ten (10) years
- their unsecured debts, divisible property or after tax income exceed the thresholds set by the Australian Financial Security Authority (AFSA)
If these criteria are met, the Debt Agreement can be signed and lodged for consideration by creditors. If a majority of creditors vote in favour, creditors are generally prevented from taking further recovery action, including commencing or continuing legal proceedings in relation to the debts.
A Debt Agreement will end when:
- the debtor fulfils all obligations under the agreement, or
- the agreement is terminated, which may result in bankruptcy if the debtor fails to comply
PERSONAL INSOLVENCY AGREEMENTS
A Personal Insolvency Agreement (PIA) is a formal alternative to bankruptcy available under Part X of the Bankruptcy Act. Unlike a debt agreement, which is generally more informal, a PIA allows a debtor to negotiate and reach a legally binding arrangement with creditors to resolve outstanding debts.
PIAs are often suitable for individuals with a higher income and fewer assets, or those with significant assets but limited income. This flexibility makes them a valuable option for managing complex financial situations while avoiding bankruptcy.
At Ramsden Lawyers, our experienced insolvency lawyers provide clear and practical advice on bankruptcy law, with a strong focus on Personal Insolvency Agreements. We assist clients throughout the entire process, including preparing the formal proposal that must be presented to creditors. This proposal outlines the debtor’s financial position and must comply with current legal requirements.
An Official Trustee, or a registered trustee, must be appointed to convene a meeting of creditors. At this meeting, creditors decide whether to accept the proposal as an alternative to bankruptcy.
Our insolvency lawyers have extensive experience in drafting Personal Insolvency Agreements. We ensure each agreement includes all required elements under the Act, including details of property, obligations, and termination procedures.
Once a Personal Insolvency Agreement is successfully completed, the debts covered by the agreement are discharged.
The drafting of the PIA itself can benefit from our Gold Coast insolvency lawyers’ experience to ensure it contains important information required by the Act ranging from identifying property to the termination procedures. Upon completion of a PIA, debt is satisfied.
End of Bankruptcy
Once bankruptcy proceedings have concluded, the outcome will be either an automatic discharge or an annulment, allowing the bankruptcy recovery process to begin.
An automatic discharge typically occurs after a period of 3 years. At this point, any remaining debts are written off. However, a bankruptcy trustee retains the right to object to an automatic discharge if the bankrupt individual has not fulfilled their obligations.
Grounds for objection may include the discovery of undisclosed or hidden assets, failure to comply with attendance requirements, or failure to make required income contributions.
Contact Us
If you are facing bankruptcy or need clear guidance on the bankruptcy process, our experienced bankruptcy solicitors are here to help. We assist individuals, small business owners, and clients managing significant assets, and we understand the complex financial challenges you may be dealing with.
Bankruptcy can begin in different ways, either through your own application or as a result of court action by creditors. Regardless of how it starts, the process follows strict legal requirements and timelines.
Our team will guide you through every step of the bankruptcy process, providing practical advice, legal expertise, and ongoing support specific to you.
Contact our bankruptcy lawyers today to arrange a consultation and get the advice you need.
Frequently Asked Questions
How Long Does Bankruptcy Last in Australia?
Bankruptcy generally lasts for three years, although this period can be extended if certain obligations are not met.
What Happens to Assets in Bankruptcy?
Certain assets may be sold by a trustee to repay creditors, while others may be protected under Australian law.
Can I Travel or Run a Business While Bankrupt?
Restrictions may apply during bankruptcy. We advise on how these obligations affect your personal and commercial activities. Contact us to speak with a bankruptcy lawyer regarding your specific situation.
Expertise In Bankruptcy Law
- Considering QBCC implications of bankruptcy claims
- Establishing a Deed of Company Arrangement (‘DOCA’) to undertake voluntary administration, as well as DOCA requirements and DOCA obligations
- Bankruptcy Proof of Claims
- Claims trading
- Bankruptcy recovery
- Bankruptcy litigation and insolvency litigation with Queensland Accredited Specialist in Commercial Litigation Ben Twomey
- Legal consultation by a Ramsden solicitor in person with our Qld clients
- Bankruptcy disputes, end of bankruptcy disputes and disputes resolution
- The impact of bankruptcy on trusts, family discretionary trusts and revocable trusts
- Liaising with liquidators
- Debt recovery
- The effect of bankruptcy on superannuation and fund protection via section 19 of the Superannuation Industry (Supervision) Act 1993 (Cth)
- Legal advice regarding the significance of having a self-managed super fund (‘SMSF’) for the purposes of bankruptcy, including discussing SMSF governing documents and the possible transfer of SMSF interests of a bankrupt individual to a non-SMSF
- The state of receivership, receivership obligations and the duty to prevent continued supply during receivership
- Ensuring any proposals tabled to creditors is compliant with the composition and arrangement requirements under section 73
- Negotiating with another commercial solicitor or law firm
- Bankruptcy debt
- Debt collection
- Bankruptcy notices
- Statutory demands
- Bankruptcy advice for commercial clients
For more information, please feel free to visit the guidance “Apply for Bankruptcy” provided by the Australian Financial Security Authority or contact our bankruptcy lawyers directly.
