Bankruptcy procedures give debtors a way to avoid paying up.

Debtors contemplating voluntary bankruptcy will be required to complete and submit detailed information about their financial affairs in a “statement of affairs”.  The Official Assignee will use the information contained in the statement of affairs to determine eligibility for entry to bankruptcy or one of the alternatives.  The Official Assignee will do a preliminary investigation to confirm the accuracy of the information provided, and once satisfied with the statement of affairs, may accept the debtor’s application, and adjudicate them bankrupt.

A bankruptcy initiated by a creditor will still be commenced through the High Court.

Bankrupts are eligible for an automatic discharge from bankruptcy after three years irrespective of whether bankruptcy was initiated by the debtor or by a creditor.

There is also an alternative to bankruptcy called a ‘no asset’ procedure. This is filed with and administered by the Official Assignee.

No Asset Procedure (NAP)

The No Asset Procedure (NAP) provides debtors with a once in a lifetime relief from their debts, and gives them the opportunity to rejoin, and make a positive contribution to, the economic community after 12 months.  

This is an alternative to bankruptcy, and to qualify a debtor has to show that they have:

• No realisable assets 
• Not previously been in NAP 
• Not previously been bankrupt 
• A debt of less than $40,000.00 (excluding student loan and fines) 
• No means of repaying the debt
• The NAP will usually be used for consumer type debt (credit cards, personal loans, hire purchase).

Summary Instalment Orders

The summary instalment scheme is in an order, made by a Judge that allows people in debt to pay back money owing in regular, easy stages. The threat of further action is lifted while the order is in force.

All applications for a summary instalment order will be received, processed and administered by the Official Assignee.

The main changes are:

• Maximum debt raised to $40,000.00 (excluding any student loan balance) 
• Repayments can be spread over five years 
• Payment by the debtor must be practical

It is important that you act quickly to recover debts before the debtor gets to the point of bankruptcy or entering into the NAP.  You want to be paid the money you are owed.  Do not delay placing your debts in the hands of a competent debt collection professional.