64 Jolimont Street, East Melbourne VIC 3002

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What is Bankruptcy?

Bankruptcy is a legal process whereby a person is declared unable to pay their debts.

 

 

In all bankruptcies, a trustee in bankruptcy is appointed to administer the bankrupt estate.  The trustee may either be the Federal Government Official Trustee, or a private registered trustee.

When someone is declared bankrupt, creditors who do not hold security for their debt (the unsecured creditors), are generally prevented from continuing to seek recovery of their debts.

Creditors cannot begin or continue recovery action during the bankruptcy period or after the person’s discharge from bankruptcy. The bankrupt is released from these debts upon their discharge from bankruptcy.

The bankrupt may choose to continue making repayments to their secured creditors. If they do not, the secured creditors may take possession of their security and sell it.

A bankrupt is generally entitled to retain the following:-

  • household furniture and personal effects
  • low value motor vehicles
  • low value income producing tools of trade
  • superannuation

At risk of forfeiture would be the share of:-

  • the family home
  • investment property
  • listed shares
  • business assets

 

 

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W Marshall & Associates 64 Jolimont Street, East Melbourne VIC 3002

Important: This is not advice. Clients should not act solely on the basis of the material contained in this Commentary. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before taking any action. The Commentary is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.