If you simply cannot reach a compromise or an agreement with your creditors, you may become bankrupt.
Bankruptcy is a complex and serious matter, so before considering this course of action you should talk to one of our trained and experienced advisors. It is important to remember that under certain circumstances it is possible for one of your creditors to apply for your bankruptcy, if you suspect that this may happen to you or to one of your clients, please talk to us without delay.
A person who is declared bankrupt receives the protection of the ‘Bankruptcy Act’ and a trustee is appointed to manage the affairs of the bankrupt estate.
This system:
- Provides a fair and equitable distribution of the bankrupt’s estate to his/her creditors.
- Permits a person who is in a dire financial position to obtain immediate relief from the pressure of most of their unsecured creditors and to make a fresh start.
- Allows for the trustee to protect and sell certain assets for the benefit of the bankrupt estate.
- Allows for an investigation of the bankrupt’s affairs by the trustee with the purpose of identifying transactions that are able to be set aside and thereby recover moneys for creditors.
Schon Condon is registered as a trustee in bankruptcy and is able to act as trustee in the above circumstances. He has the necessary qualifications and expertise to provide the most appropriate solution to individual situations.
Before considering bankruptcy, it is always important to consider a number of alternatives that in many individual cases will be enough to avoid bankruptcy altogether.
Personal Insolvency Agreements (Formally known as Part X Arrangements)
These often provide an alternative to bankruptcy for insolvent individuals who wish to reach an agreement with their creditors regarding the settlement of their debts.
Benefits include:
- May provide a greater return to creditors than would otherwise be available under bankruptcy;
- May allow a sole trader to continue operating their business;
- Avoiding the stigma of bankruptcy, and providing a flexible framework to resolve the solvency issues of the debtor and deal with creditors’ claims.
Debt Agreements
Debt Agreements are similar to Personal Insolvency Agreements, however they are only available to debtors who satisfy strict threshold requirements concerning the level of debts, assets and income.
Benefits include:
- Low cost means of resolving insolvency;
- Once creditors have accepted the agreement, the debtor is released from those debts that they would be released from if they became bankrupt;
- May allow a sole trader to continue operating their business;
- Not precluded from being or becoming a company director.
Informal Arrangements
This arrangement allows the person to deal with creditors’ claims without the need for a formal insolvency appointment. It is most suitable to debtors with a small number of creditors who have not started legal recovery action. Here the major benefit to all parties is that costs are significantly lower than a formal insolvency appointment.
Condon Associates has significant experience in dealing with creditors and can provide assistance in all of the above forms of negotiation.
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