27 June 2010
Resolving Complaints about Trustees and Administrators
03/07/10 12:08
RESOLVING COMPLAINTS ABOUT TRUSTEES AND ADMINISTRATORS
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
January 2004 Edition
About Bankruptcy Regulation
Bankruptcy Regulation is an independent branch of ITSA which reports directly to the Inspector-General in Bankruptcy.
It is responsible under the Bankruptcy Act for monitoring the standards of trustees and debt agreement administrators.
Its role includes, on behalf of the Inspector-General in Bankruptcy, dealing with complaints against trustees and administrators and dealing with requests for review of certain decisions made by trustees.
Who may complain to Bankruptcy Regulation?
Anyone may complain if they are concerned about an action taken by a:
• trustee
• debt agreement administrator
• controlling trustee of a Part X arrangement.
Bankruptcy Regulation does not have specific authority to make enquiries regarding complaints about someone who provides advice in setting up a Debt Agreement, or in respect to voting on Debt Agreement proposals.
ITSA however does have a role in this area and may be able to assist you. Please contact your local ITSA office if you have a query or complaint concerning these aspects of the Debt Agreement process.
See the ITSA website www.itsa.gov.au for contact information
How to complain
Bankruptcy Regulation encourages you to first try and resolve your concerns with the trustee or administrator. If you have been dealing with an employee of the trustee or administrator, you should raise your concerns directly with your trustee or administrator.
If you are dissatisfied with the way they handle your complaint, or you feel unable to raise the issue with them, you are welcome to contact Bankruptcy Regulation.
Please send a full written explanation of your complaint to Bankruptcy Regulation along with copies of any relevant documents or letters.
See rear cover for contact information
Bankruptcy Regulation treats all complaints seriously and needs to understand the precise basis of your complaint and how you have tried to resolve it.
What does it cost?
There is no charge for a review undertaken by Bankruptcy Regulation.
ITSA (Insolvency and Trustee Service Australia) is a Commonwealth government agency. ITSA is the trustee when a registered trustee is not appointed.
See the Prescribed Information booklet for definitions of bankruptcy terms.
How is my complaint handled?
Bankruptcy Regulation will advise you in writing within 7 days of receiving your complaint whether it considers an investigation is warranted.
If your complaint is investigated, and the investigation is not finalized within 28 days, you will be kept informed of its progress.
Bankruptcy Regulation aims to finalise your complaint within 60 days of receiving it.
If your complaint is beyond Bankruptcy Regulation’s powers to investigate, or they cannot resolve it, they will advise you of your options, such as making an application to the Court.
More information is available in the pamphlet: Can I Appeal? Review and appeal of trustee and administrator decisions
How is my complaint investigated?
Bankruptcy Regulation may be able to resolve some complaints through discussions with the trustee or administrator, particularly if they are able to demonstrate to the trustee or administrator that they have incorrectly applied the law.
The basis of your complaint is usually explained to the trustee or administrator. If you wish to remain anonymous, or have any concerns about details being made available to them, please make this clear in your letter of complaint.
If the matter is investigated further, a written response is obtained from the trustee or administrator addressing the issues of your complaint and their file may be inspected.
If you wish, their written response may be made available to you; however, because of Privacy Act restrictions, this can only occur if the trustee or administrator agrees.
Report on the investigation
Bankruptcy Regulation will provide you and the trustee or administrator with a copy of any report it provides on your complaint, whether or not their response is made available to you.
Decisions which can be reviewed by Bankruptcy Regulation
In some instances Bankruptcy Regulation can review a trustee’s decision. Reviewable decisions are:
• filing of a notice of objection to discharge
• issuing an income contribution assessment
• rejecting a hardship application with respect to an income contribution assessment
• rejecting an application for early discharge (applies only to bankruptcies prior to 5 May 2003)
If your complaint relates to a decision of a trustee that is reviewable by Bankruptcy Regulation, you should follow the procedure set out in the pamphlet: Can I Appeal? Review and appeal of trustee and administrator decisions.
Bankruptcy Regulation does not have the authority to review any other decision made by a trustee, such as:
• selling an asset (eg house, property, stock, plant and equipment, motor vehicle etc.)
• admitting/rejecting a proof of debt.
What else can Bankruptcy Regulation help with?
If your complaint cannot be resolved by discussion with the trustee or administrator, and would involve direct intervention in the conduct of an administration, you will be advised of other options available to you under the Act. In such circumstances, your remedy may be to apply to the Court.
The Bankruptcy Act provides specific review mechanisms for complaints about trustee’s fees. A creditor or bankrupt dissatisfied with a registered trustee’s claim for fees and costs may request the Official Receiver to tax the trustee’s claim. The request must be made within 28 days of you becoming aware of the amount of the claim. You will be charged for this taxing service at a specified hourly rate. Under certain circumstances ITSA’s fees as a trustee can also be reduced.
More information is available in the pamphlet: Can I Appeal? Review and appeal of trustee and administrator decisions
If a complaint reveals a possible offence against the Bankruptcy Act, it will be referred to Bankruptcy Fraud Investigation for further examination.
Your complaint is permanently recorded even if Bankruptcy Regulation cannot resolve it. The record is kept as valuable feedback to assist in:
• determining the scope of Bankruptcy Regulation’s monitoring of trustees and administrators
• advising Government on bankruptcy policy issues
Further information about what you can expect from Bankruptcy Regulation and ITSA generally is available in the Client Service Charter
Where to contact us
ITSA website wwwitsa.gov.au
For more information please contact a Bankruptcy Regulation Office
Queensland and NT
Bankruptcy Regulation
PO Box 10443, Adelaide St
Brisbane QLD 4000
Ph: 07 3360 5425
Fax: 07 3360 5402
email: br.qld@itsa.gov.au
New South Wales and ACT
Bankruptcy Regulation
Level 8, 135 King St
SYDNEY NSW 2000
Ph: 02 8233 7857
Fax: 02 8233 7805
email: br.nsw@itsa.gov.au
Western Australia
Bankruptcy Regulation
GPO Box H536
Perth WA 6001
Ph: 08 9268 1204
Fax: 08 9268 1287
email: br.wa@itsa.gov.au
Victoria and Tasmania
Bankruptcy Regulation
Level 10, 360 Elizabeth St
MELBOURNE VIC 3000
Ph: 03 9272 4800
Fax: 03 9272 4940
email: br.vic@itsa.gov.au
South Australia
Bankruptcy Regulation
GPO Box 2604
ADELAIDE SA 5001
Ph: 08 8112 4315
Fax: 08 8112 4304
email: br.sa@itsa.gov.au
Overseas Travel: Can I leave Australia if I become bankrupt?
03/07/10 12:08
Overseas Travel: Can I leave Australia if I become bankrupt?
The provider of this information is Insolvency & Trustee Services Ausralia.
Need further information? Visit our legal forum where you can ask questions and search for similar topics.
OVERSEAS TRAVEL
CAN I LEAVE AUSTRALIA IF I BECOME BANKRUPT?
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
January 2004 Edition
Can I leave Australia if I become bankrupt?
You can leave Australia while you are bankrupt but you must obtain your trustee’s written consent before you leave.
Your trustee will need to be satisfied that you have legitimate reasons for the proposed travel e.g.:
• as a condition of your employment
• for compassionate reasons.
Your trustee may impose written conditions when giving permission such as:
• the period or duration of travel
• the date you are required to return to Australia
• that you pay any contributions you have been assessed to pay.
Contributions are sums of money that a bankrupt person is required to regularly pay to the trustee from their income.
More information is available in the pamphlet: Income Contributions
You are allowed to have a passport however you must hand it over to your trustee on request.
Bankruptcy is a process where people who cannot pay their debts become bankrupt to receive the protection of the Bankruptcy Act and their estate is administered by a trustee. It allows for the fair distribution of property among creditors and the prosecution of dishonest debtors.
Your trustee can be either a registered trustee or ITSA.
Your trustee may refuse permission if:
• you have not carried out all of your obligations under the Bankruptcy Act e.g. filing a Statement of Affairs
or
• you are required to assist your trustee in the administration of your bankruptcy e.g. to attend an interview, examination or a meeting of creditors.
If you don’t return to Australia when you said you would, or if your trustee has asked you to return and you do not, your trustee may lodge an objection to your discharge. If an objection is lodged your bankruptcy will be extended by 8 years from the date you return to Australia.
Warning:
If you leave, or try to leave Australia without the written consent of your trustee, you are committing an offence under the Bankruptcy Act, punishable by law. You may be prevented form leaving Australia at the airport or ship terminal.
Contravening a condition imposed by your trustee is also an offence under the Bankruptcy Act punishable by law.
How do I apply for permission?
Write to your trustee as soon as you become aware that you may need to leave Australia explaining:
• the reasons for the proposed trip
• the name of the countries you propose to visit
• the date you intend to leave Australia
• the date you intend to return to Australia
• the name of the person paying for the trip, and a confirming letter from that party (unless you propose paying for the trip yourself)
• an overseas address where your trustee could readily contact you
• your level of income in the current Contribution Assessment Period (CAP)
Your CAP will generally be the 12 month period beginning on the date of, or anniversary of, your bankruptcy. Ask you trustee if you do not know.
• proposed arrangements for paying any contribution liability whilst overseas.
Your trustee must have adequate time and information to consider your request. Your request must be in writing so that your trustee understands exactly what you are requesting.
You will be advised promptly of the trustee’s decision and any conditions placed on your travel.
If you are not satisfied with your trustee’s decision you may apply to the Federal Court or the Federal Magistrates Service for a review. You should seek legal advice before making an application.
Where to contact us
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
Information for Creditors about Bankruptcy
03/07/10 12:06
Information for Creditors about Bankruptcy
The provider of this information is Insolvency & Trustee Services Ausralia.
Need further information? Visit our legal forum where you can ask questions and search for similar topics.
INFORMATION FOR CREDITORS ABOUT BANKRUPTCY
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
June 2004 Edition
What is Bankruptcy
Bankruptcy is a legal process where people, who cannot pay their debts or reach a compromise or arrangement with their creditors, have their affairs administered under the Bankruptcy Act.
The effects of bankruptcy are:
• The bankrupt obtains relief from his or her creditors
• The creditors receive an equitable distribution of the bankrupt’s property (dividends).
Bankruptcies are administered by a trustee, either a registered trustee or ITSA.
If a person makes themselves bankrupt they may choose the trustee. If they do not choose, then ITSA is their trustee.
During bankruptcy the creditors may decide to change trustees, and trustees may also obtain the consent of another trustee to replace them.
A registered trustee is a person registered with ITSA to be a trustee of bankruptcies and Part X agreements
See the Prescribed Information booklet for definitions of other bankruptcy terms
How does bankruptcy affect creditors?
Unsecured creditors:
• cannot take any remedy against the person or property of the bankrupt
• cannot commence or take a fresh step in any legal action, such as a summons or garnishee, and must stop any recovery action by a sheriff or bailiff
• should not generally be paid by bankrupts
• may lodge a proof of debt with the trustee, and participate in any dividends.
Secured creditors:
A secured creditor is a creditor who holds a security over an asset (eg by a mortgage or a bill of sale).
Secured creditors:
• Are entitled to take possession of the secured asset and sell it if the bankrupt is in default
• May lodge a proof of debt in the bankruptcy as an unsecured creditor for any loss resulting from dealing with their security.
A bankrupt may agree to pay a secured creditor in order to keep an asset; however, if it is a divisible asset the trustee may seize and sell the asset when there is sufficient equity.
Divisible assets are assets/property which can be legally sold in bankruptcy by the trustee
A garnishee is an automatic deduction from a bankrupt’s income or bank account arranged without his or her consent
A proof of debt is a formal claim for a debt lodged by a creditor with the trustee
Which debts does a bankrupt have to pay during bankruptcy?
1. Some debts are not provable in bankruptcy. Some creditors cannot receive any money from the bankrupt estate for certain types of debts but they can continue debt recovery action against the bankrupt even during bankruptcy, for example:
• penalties and fines imposed by a court
• damages from accidents (eg car accidents), unless, before bankruptcy, the sum of damages has been fixed by a court judgment or the bankrupt has a written agreement with the other party
• student assistance/supplement loans.
2. Any new debts created on or after the date of bankruptcy.
Which debts continue after a bankrupt’s discharge?
Creditors with certain types of provable debts can both receive money from the bankrupt estate and can also continue debt recovery action after a bankrupt is discharged from bankruptcy, for example:
• Child support debts
• Maintenance
• Debts incurred by fraud
• Accumulated HECS (Higher Education Contribution Scheme) debts raised before bankruptcy.
More information is available in the pamphlet: Debts and Creditors: What happens to them if I go bankrupt?
A provable debt is an amount for which a creditor is entitled to claim a dividend in bankruptcy
What happens to a bankrupt’s assets?
Assets or property are anything that a bankrupt owns, buys or receives. A bankrupt’s interest in assets passes to the trustee.
Exempt assets
Some assets are exempt in bankruptcy, which means that bankrupts may keep them, or keep up to a limited value. Exempt assets include:
• most ordinary household and personal items (eg furniture, bedding and linen, electrical appliances, educational equipment)
• property used to earn an income (such as tools of trade) up to a limit of $2,900 (indexed)
• vehicles (cars or motorbikes) used as a bankrupt’s primary means of transport, up to a limit of $5,800 (indexed)
• life assurance and superannuation policies, up to the pension Reasonable Benefit Limit
• compensation and damages for personal injury, and assets bought with compensation proceeds
• some grants, including grants under the Rural Adjustment Act or Farm Household Support Act
• property protected under the Defence Service Homes Act
• assets held in trust for another person.
Indexed – the amount regularly changes in line with the Consumer Price Index or the base pension rate
Awards of a sporting, cultural, military or academic nature made to the bankrupt, such as medals or trophies but not cash or jewellery, and claimed as having sentimental value may be exempted by the vote of creditors.
Creditors who hold security over an exempt asset are entitled to take possession of it if the bankrupt is in default.
Divisible assets
Assets that are not exempt are called divisible assets. A trustee may deal with dividible assets. These assets may be in Australia or overseas, and in the possession of the bankrupt or someone else.
More information is available in the pamphlet: Assets: What happens to my assets if I go bankrupt?
What are contributions?
Contributions are regular compulsory payments from a bankrupt’s income to their trustee to repay creditors.
At the start of a bankruptcy, and at each 12 month interval during bankruptcy, the trustee makes an assessment of a bankrupt’s contribution liability.
Every bankrupt is assessed, and if their income exceeds a certain threshold (level) they must pay contributions. Low income earners are not required to pay contributions.
More information is available in the pamphlet: Income Contributions: Will I have to make payments from my income?
What are the duties of a trustee?
A trustee must:
• notify creditors of the bankruptcy and report on important matters
• determine whether assets are available to pay creditors
• sell and recover assets for the benefit of creditors
• pay dividends to creditors when there is enough money to do so
• ensure bankrupts fulfill their duties
• refer bankrupts who may have committed an offence to relevant law enforcement authorities
What are the obligations of a bankrupt?
Bankrupts must assist their trustee to administer their bankruptcy. If they do not they may be required to attend an examination to give information and evidence under oath.
The Bankruptcy Act does not prevent a bankrupt from obtaining credit. However a bankrupt must inform the credit provider of their bankruptcy if the credit exceeds $4,029 (indexed).
The Bankruptcy Act does not prevent a bankrupt operating a business. However bankrupts trading under assumed or business names must disclose that they are bankrupt to every person they deal with.
Do I have to attend meetings of creditors?
The trustee may convene a meeting of the bankrupt’s creditors at any time.
Creditors may request in writing that the trustee convene a meeting. However, if the creditors making the request are less than one-fourth in $ value of the creditors, they must lodge with the trustee sufficient security for the costs of holding the meeting.
The trustee will notify creditors of the time, place and agenda of the meeting. Creditors may participate in a meeting in person or by telephone.
The trustee may require the bankrupt to attend the meeting to answer creditors’ questions and give such information about his or her conduct and affairs as the meeting requires.
How are trustee fees and expenses determined?
The trustee is entitled to fees and expenses for handling the bankruptcy.
ITSA as a trustee charges fees set by the Bankruptcy Act. ITSA’s fees are normally at least $4,500.
More information is available in the pamphlet: ITSA Statutory Fees and Charges
Registered trustees usually charge an hourly rate which is either fixed:
• by creditors, or
• in accordance with the Bankruptcy Regulations.
Fees are usually paid from the sale of assets or a bankrupt’s income contributions. If trustees do not receive enough money to pay their fees, they are allowed to recover from the bankrupt a minimum fee of $1,331 (indexed).
A creditor may also request the Official Receiver to review a registered trustee’s fees and costs if he or she is dissatisfied with their claim. This is referred to as a ‘taxing of costs’. The request must be made within 28 days of you becoming aware of the amount of the claim. The applicant may be required to pay for the taxing and will be charged an hourly rate.
Trustees may also ask creditors to advance money to fund investigations where creditors are likely to benefit directly from a successful investigation (eg to recover assets). If any money is received by the trustee, creditors’ advances are repaid before fees and dividends.
Will I receive a dividend?
A dividend will be paid to unsecured creditors if funds are received in excess of amounts required to pay:
• the government realisations charge
• the trustee’s fees and expenses
• claims of priority creditors (eg employee wages).
If a trustee expects to pay a dividend they will notify the creditors and give them time to lodge a proof of debt. It is important that creditors retain sufficient evidence of their debt.
Can a bankruptcy be annulled?
A bankruptcy can be annulled (cancelled) when:
• the government realisations charge, trustee’s fees and expenses and the creditors have been paid in full or
• An offer of composition or arrangement during bankruptcy is accepted by creditors to satisfy their debts.
In rare cases, bankrupts may also apply to the Court for an annulment if they think that they should not have been made bankrupt or they should not have lodged a Debtor’s Petition.
More information is available in the pamphlet: Annulment: Can my bankruptcy be cancelled?
Realisations charge is a Commonwealth Government levy on all bankruptcies, compositions or arrangements. It is taken out before expenses, fees and dividends.
When is a bankrupt discharged?
A bankrupt is normally automatically discharged 3 years and 1 day after the Statement of Affairs was lodged with and accepted by ITSA.
If a person has been made bankrupt by the Court the Statement of Affairs was probably lodged some time after the date of bankruptcy.
The period of bankruptcy may be extended to 5 or 8 years if the trustee lodges an objection to discharge with ITSA. An objection is usually lodged because the bankrupt has not co-operated with the trustee or there has been some misconduct on their part.
More information is available in the pamphlet: Discharge: How and why does my bankruptcy end?
A composition is an offer made by a bankrupt through a trustee to creditors to finalise his or her debts
Where can I find information about specific bankruptcies?
Information about personal insolvencies in Australia is available from the public record which consists of the National Personal Insolvency Index (NPII) database.
Certain documents lodged with ITSA may also be inspected by debtors, creditors and the public.
Any member of the public can:
• Pay information brokers of ITSA to search the NPII, or
• Search the document files if they pay a fee to ITSA.
Creditors wishing to find out details of a specific bankruptcy should speak to the relevant trustee.
More information is available in the pamphlet: Searching the Public Record
Where to contact us
Telephone 1300 364 785
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
Income Contributions: Will I have to make payments from my income?
03/07/10 12:04
Income Contributions: Will I have to make payments from my income?
The provider of this information is Insolvency & Trustee Services Ausralia.
Need further information? Visit our legal forum where you can ask questions and search for similar topics.
INCOME CONTRIBUTIONS
WILL I HAVE TO MAKE PAYMENTS FROM MY INCOME?
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
January 2004 Edition
Contributions are regular and compulsory payments from a bankrupt's income to their trustee to repay creditors.
Will I have to pay contributions?
All bankrupts are assessed by their trustees for contribution liability at the start of their bankruptcy, and at each 12 month interval (Contribution Assessment Period (CAPJ) during bankruptcy.
Your CAP will generally be the 12 month period beginning on the date of, or anniversary of, your bankruptcy. Ask your trustee if you do not know.
If your income exceeds a certain threshold (or level) you must pay contributions.
Low income earners are not required to make income contributions. However, even if you do not have to pay contributions you may make voluntary payments to your trustee for the benefit of your creditors.
Your trustee will calculate your contribution liability using the formula on pages 4-5. The table below is an approximate guide to how much you may have to pay based on certain levels of before tax income and number of dependants.
Number of dependants
0
1
2
3
Gross
(before tax)
annual income
Payments per fortnight
(as at 20 September 2003)
$40,000
$0
$0
$0
$0
$45,000
$5
$0
$0
$0
$50,000
$71
$0
$0
$0
$55,000
$130
$11
$0
$0
$60,000
$184
$65
$6
$0
$65,000
$236
$117
$58
$25
$70,000
$286
$167
$107
$74
$80,000
$385
$266
$206
$173
What is included as income?
Income for bankruptcy purposes is different to your taxable income.
Income includes:
• any wages and salary (including second jobs)
• tax refunds for financial years during bankruptcy
• value of fringe benefits from your employer or others (eg use of a car, subsidised housing/rent, free board)
• salary sacrifice arrangements
• business drawings and profits
• benefits and pensions
• income you earn which is paid to another person or entity.
You must disclose all income to your trustee, who will determine whether any fringe benefits in your job or salary sacrifice are included in your assessment and, if so, to what extent.
There are penalties for not disclosing all the income and benefits you receive.
A dependant is a person who resides with you and
• is wholly or partly dependant on you for economic support, and
• whose income during the assessment period is not more than the amount prescribed by the Bankruptcy Regulations (currently $2,500 and indexed).
How are contributions calculated?
Your trustee will calculate your contribution liability by:
1. Calculating your assessed income
Your trustee will:
• determine your total income from all sources
• then deduct your income tax (which includes your Medicare levy) and assessed child support or maintenance payments.
2. Working out your Actual Income Threshold Amount (AITA)
The AITA is based on an indexed figure called the Base Income Threshold Amount (BITA), adjusted to take into account your dependants.
Dependents
AITA
Net annual income after tax
(as of 20 September 2003)
0
$34,398.00
1
$40,589.64
2
$43,685.46
3
$45,405.36
4
$46,093.32
More than 4
$46, 781.28
Indexed figures regularly change in line with the Consumer Price Index or the base pension rate, All indexed amounts it this pamphlet are correct as at September 2003. To find out the current BITA see the ITSA website vvwkb,.itsa.gov.au or contact ITSA (see rear cover).
3. Calculating your contribution liability
Using your Assessed Income and AITA your trustee will calculate your contribution liability according to the following formula from the Bankruptcy Act
Assessed Income –AITA
2
Notice of Assessment
Your trustee will send you an Assessment of your contribution liability, explaining:
• how it was calculated
• when your payments are to start
• their frequency (eg a lump sum payment or fortnightly payments).
Example
Bob, a bankrupt, advises his trustee that he expects his gross income for the first 12 months of his bankruptcy to be $65,000, and that during this period he will have one person dependant on him.
Step 1: the trustee calculates Bob's Assessed Income.
gross expected income $65,000.00
deduct income tax 17,357.00
deduct Medicare levy 975.00
Assessed Income $46,668.00
Step 2: the trustee works out Bob's AITA.
AITA (with 1 dependant) $40,589.64
Step 3: the trustee uses Bob's Assessed Income and AITA to calculate his annual contribution liability.
$46,668 - $40,589.64 = $6,078.36 /2 = $3,039.18
The trustee issues Bob with a Notice of Assessment, and asks him to pay the sum of $3,039.18 at the rate of $117.00 per fortnight.
Payment arrangements
Your trustee may be willing to alter payment arrangements, particularly if you are paid on a monthly basis or your income is 'seasonal'.
Arrangements may be made to automatically deduct contributions from your salary or bank account.
Penalties for non-payment
If you are asked to pay and you do not, your trustee will take recovery action to collect contributions owing, even if you have been discharged from bankruptcy.
Your trustee may:
• garnishee (automatically deduct without your consent) from your income or bank account or from a third person who holds money on your behalf
• extend your bankruptcy to a maximum of 8 years and you may have to pay contributions for this extended period.
What if my circumstances change?
You must advise your trustee immediately if your income or number of dependants changes, or you become aware that they will change, even if you have not been assessed to pay contributions. If you do not advise your trustee your assessment will be incorrect and you may have not paid enough or paid too much.
At the end of each 12 month period your trustee will re-assess your contribution liability based on your actual income and dependants for the period.
If your trustee finds out that you have not paid enough leg because your income was greater than you estimated) then you will have to make up the shortfall in contributions. If however you have paid too much the extra payments cannot be refunded. They will be taken into account in the next assessment.
Hardship variations
If you are assessed to pay contributions but you consider that you will suffer hardship in paying, you may apply to your trustee to reduce your contributions.
Hardship grounds are limited to circumstances of an exceptional nature which would impose an excessive financial burden on you. Those grounds may include:
• your or your dependant's illness or disability that requires ongoing medical attention
• cost of child day care to enable your continued employment
• private rental expenses that take up a substantial part of your income
• substantial travelling expenses to and from work
• loss of contribution, usually made by your spouse or someone residing with you, to your costs of maintaining your household.
Your trustee will be able to explain hardship grounds to you.
• explain why you will suffer hardship
• provide satisfactory evidence of your income and expenses, including any supporting documents.
Your trustee must:
• decide your application within 30 days after receipt of your application (if the trustee does not make a decision within 30 days, the trustee is taken to have refused the application)
• refuse the application if she or he is not satisfied that you will suffer hardship if required to pay the assessment
• give written notice to you of the decision on the application, refer to evidence or other material on which it was based and give reasons for the decision.
Review
If you disagree with your trustee's assessment or decision to refuse a hardship variation, you are entitled to request a review from Bankruptcy Regulation.
More information is available in the pamphlet: Can I Appeal?: Review and appeal of trustee and administrator decisions
Where to contact us
Telephone 1300 364 785
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
How do I go bankrupt?
03/07/10 12:03
How do I go bankrupt?
The provider of this information is Insolvency & Trustee Services Ausralia.
Need further information? Visit our legal forum where you can ask questions and search for similar topics.
HOW DO I GO BANKRUPT?
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
June 2004 Edition
Why choose bankruptcy?
If you cannot pay your debts, and have been unable to come to a compromise or arrangement with your creditors, then you may decide to go bankrupt.
Bankruptcy is a process where people receive the protection of the Bankruptcy Act.
The Prescribed Information booklet details alternatives to bankruptcy and the obligations and consequences of bankruptcy. Financial counsellors and other advisers can also give you information about bankruptcy and alternative options. See the ITSA website www.itsa.gov.au or contact ITSA offices (see rear cover) for booklets or lists of contacts.
Warning:
The consequences of bankruptcy are serious. It should only be chosen after you have looked at every other option.
Can anyone go bankrupt?
There are no income, asset or debt limits if you decide to apply for bankruptcy.
To become bankrupt you:
• cannot have an unfinalised Part IX Debt Agreement or Part X agreement in place, and
• must be ordinarily resident in Australia; or have owned a house or business, or have carried on a business, in Australia, or
• must be personally present in Australia when you lodge your debtor’s petition.
If you have any questions please ask ITSA. Do not lodge your bankruptcy documents if you do not understand how it will affect you.
How do I become bankrupt?
To apply to become bankrupt you need to complete and lodge the following three documents with the ITSA office in your state or territory. These documents are available from ITSAs website and offices, registered trustees and many financial counsellors.
Note:
• you can lodge your documents in person, by post or by fax
• you cannot lodge your documents by email.
1. Debtor’s Petition
This is your application to become bankrupt. You need to:
• answer every question
• sign and date it in front of a witness (who must also sign and date it).
Warning:
The presentation of a Debtor's Petition is an act of bankruptcy. If your Debtor's Petition is rejected, a creditor can use this to apply to the Federal Court or Federal Magistrates Service to make you bankrupt.
2. Statement of Affairs
This document identifies who you are. It will provide your trustee with essential information, such as your income, assets, debts and business dealings. You need to:
• attach any documents if asked to do so
• sign it.
Warning:
There are penalties under the Bankruptcy Act for providing false or misleading information.
3. Acknowledgement that you have received and read the Prescribed Information booklet
The Bankruptcy Act prescribes that information about alternative options to bankruptcy and the consequences of bankruptcy must be given to people who are contemplating bankruptcy. You need to:
• read the booklet
• sign and then detach the Acknowledgement on page 19
• attach the signed Acknowledgement to your bankruptcy papers.
Creditors can make you bankrupt
One of your creditors may apply to the Court in a Creditor's Petition to make you bankrupt if you have committed what is called an act of bankruptcy.
The most common act of bankruptcy relied on by a creditor is a failure to comply with a bankruptcy notice requiring that the creditor's debts, of at least $2,000, be paid within 21 days.
What happens after I lodge my bankruptcy documents with ITSA?
ITSA will decide whether to accept your Debtor's Petition within one business day (Monday to Friday) of you lodging your documents.
ITSA examines your documents to make sure that:
• they have been fully and properly completed and signed
• all necessary attachments are included
• there is no reason to reject your petition.
ITSA will not accept your documents if there is information or attachments missing. Your documents will be returned to you for amendment.
In a very few cases, your Debtor's Petition may be rejected if ITSA considers that:
• you are able to pay your debts within a reasonable time, and either
• you have previously been bankrupt on your own petition three or more times or once in the last five years, or
• you are unwilling to pay one or more creditors or creditors in general.
ITSA will talk to you before deciding to reject your petition. If your petition is rejected, ITSA will write to you to explain why your Debtor's Petition has been rejected and how to obtain a review of this decision.
More information is available in the pamphlet:
Debts and Creditors: What happens to them if I go bankrupt?
If your Debtor’s Petition is accepted
• You become bankrupt within one day.
• You are given an administration number.
• ITSA records your bankruptcy on the NPII (National Personal Insolvency Index) database. Your name will appear on the NPII forever.
• A trustee will administer your bankruptcy. ITSA will be your trustee unless a registered trustee has consented to be your trustee.
• Your assets, income and debts must be disclosed to your trustee.
• Your trustee advises your creditors of your bankruptcy and provides them with a summary of your Statement of Affairs.
• Your trustee will sell your divisible assets.
• Your trustee will assess you for income contributions. You may have to pay contributions for the benefit of your creditors.
• You are released from certain debts when you are discharged from bankruptcy. However, there may be some debts you still have to pay.
More information is available in the pamphlets:
Debts and Creditors: What happens to them if I go bankrupt?
Assets: What happens to my assets if I have to go bankrupt?
Contributions: Will I have to make payments from my income?
Your trustee
If you make yourself bankrupt you may choose your own trustee to administer your bankruptcy. If you do not choose a trustee, ITSA will be your trustee.
If a creditor makes you bankrupt, they choose your trustee.
During your bankruptcy, your creditors may decide to change your trustee, and trustees may also obtain the consent of another trustee to replace them.
When will I be discharged from bankruptcy?
A discharge from bankruptcy normally happens automatically 3 years and 1 day after your Statement of Affairs has been lodged with and accepted by ITSA.
In some circumstances, the period of your bankruptcy may be extended to either 5 or 8 years if your trustee lodges an objection to your discharge with ITSA. An objection is usually lodged because a bankrupt has not co-operated with the trustee or there has been some misconduct.
Your bankruptcy can only be annulled (cancelled) earlier through:
• payment of your debts in full, or
• an offer to creditors (composition), or
• application to the Court.
More information is available in the pamphlets
Annulment and Discharge
Where to contact us
Telephone 1300 364 785
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
Guarantor's Rights & Obligations
03/07/10 12:02
Guarantor's Rights & Obligations
The provider of this information is McKean & Park Lawyers & Consultants.
Need further information? Visit our legal forum where you can ask questions and search for similar topics.
GUARANTORS’ RIGHTS AND OBLIGATIONS
WHO IS A GUARANTOR?
A guarantor is a party who agrees to be responsible for the payment of another party’s debts.
WHAT IS A GUARANTEE?
A guarantee is a written promise by you (the guarantor) that the person who is obtaining credit (the debtor / borrower) will keep to all the terms and conditions of their contract (the credit contract / loan agreement).
THE GUARANTOR IS RESPONSIBLE
A guarantee is not just a formality to help a friend or relative obtain credit. On the contrary, being a guarantor is a big responsibility. It means that you are prepared to pay if the debtor / borrower does not. You may need to pay the credit provider all the money owing under the contract as soon as it is asked for. Often the lender will sue you without suing the debtor / borrower.
Many people believe that the friend or relative for whom you “go guarantor” would never do anything to make the credit provider enforce the guarantee. Unfortunately, your friend or relative may suddenly find that he or she cannot meet the terms and conditions of the credit contract because of unemployment, illness or any other reason.
To “go guarantor”, you must be prepared to pay and you must understand your obligations as a guarantor.
GUARANTOR’S OBLIGATIONS
If the debtor / borrower defaults in payment or in other obligations to the lender, the guarantor would be liable to make good that default which could involve all amounts owed by the debtor / borrower to the lender and substantial arrears of interest.
CAN GUARANTORS ESCAPE THEIR OBLIGATIONS?
Over recent years there has been significant press about guarantors who escape their obligations under guarantees. This was generally on the basis that they were able to demonstrate to a court that they did not understand what they were doing when they gave the guarantee.
Lenders have learnt many lessons from those court cases and you should assume that any guarantee you sign will be enforceable and that any security given by a guarantor will be enforceable.
Lenders may require guarantors to get legal advice or financial advice or both. Lenders do this to reduce the risk of guarantors being able to escape their liabilities by claiming they did not understand the legal ramifications or the financial ramifications of giving the guarantee or giving any security in support of the guarantee.
Guarantors can also sue the debtor / borrower if the guarantor has been obliged to pay out under his or her guarantee.
WHAT INFORMATION SHOULD A GUARANTOR GET?
Before you sign the guarantee you should make sure that you receive from the lender:
• a copy of the loan agreement that the debtor / borrower is to sign.
• a document explaining the rights and obligations of a guarantor.
There are various new obligations of a Bank lender if the loan is to an individual or small business. These new obligations will apply from August 2003 when the new Code of Banking Practice takes effect. For example there must be a prominent notice on any guarantee of the fact that the guarantor should:
1. seek independent legal and financial advice on the effect of the guarantee,
2. the guarantor can refuse to enter into the guarantee, and
3. there are financial risks involved with the giving of the guarantee and other matters.
The Bank lender is obliged to tell the guarantor about any notice of demand made by the Bank on the debtor and any excess overdrawing or dishonour in relation to any loan facility the debtor has or has had with the Bank.
UNDERSTAND THE NATURE OF THE DOCUMENTS
You should make sure that you have a clear understanding of what these documents do and what you are guaranteeing. Some of the things you should ascertain are:
• Is the guarantee an all accounts guarantee or a guarantee limited to a specific transaction? An all accounts guarantee covers past and future, actual and contingent indebtedness of the debtor / borrower in his or her own right and as a guarantor.
• Is the guarantee limited or unlimited in duration?
• Is the liability of the guarantor limited to a certain amount, or is it unlimited?
UNDERSTAND THE TRANSACTION
Ensure that you are comfortable with the nature of the underlying transaction.
You should consider the overall desirability of the transaction, particularly if the guarantee is to be supported by a mortgage over your home or other assets. You should ascertain:
1. the history of the debtor’s / borrower's account with the lender;
2. whether the debtor / borrower has been or is in default;
3. the extent of any other securities held;
4. the nature of the principal debtor's / borrower’s business, how long it has been established and whether or not it is risky.
If you are concerned about these matters, you should have an accountant go through the books of the debtor / borrower.
UNDERSTAND THE CAPACITY IN WHICH YOU ARE SIGNING THE GUARANTEE.
Make sure that you understand the capacity in which you are signing the guarantee. If it is as director, is there a corporate benefit? Otherwise, there could be a breach of your duties as a director. If you are signing as a trustee of a trust, is the guarantee to be limited to the trust’s assets? If not for the benefit of the trust, the trustee may lose its right of indemnity from the trust assets.
CAN YOU LIMIT YOUR GUARANTEE?
The short answer is yes.
You can specify to the lender that you will only go guarantor if you can limit your guarantee to a specified amount of money, and/or for a limited amount of time. However, bear in mind that the whole reason that the lender requires you as guarantor is because the debtor/borrower is not able to provide sufficient security for the loan on his or her own. If you limit your guarantee the lender may then refuse to loan the money to the debtor/borrower.
You should endeavour to limit your guarantee to the particular amount lent plus interest and recovery costs of that amount and exclude from your guarantee any further advances made later to the debtor/borrower.
WHAT IS AN “ALL ACCOUNTS” GUARANTEE?
An "all accounts" guarantee means that you guarantee all the money that is at any time owing by the debtor/borrower to the lender including money owing in relation to:
• other loans;
• guarantees that the debtor/borrower has given;
• overdrafts;
• credit cards;
• chattel leases; and
• any other monies owing.
Because it is a guarantee of money that may be owing at any time, an "all accounts" guarantee does include any further advances and loans made after the date that the guarantee was signed.
You should endeavour, where possible, to limit your guarantee to the particular amount that you have been asked to guarantee. Of course, the whole reason you are being asked to provide your guarantee may be because the lender feels that it is over-exposed to the debtor/borrower because of other loans. In that case, the lender may require an "all accounts" guarantee or refuse to loan the money to the debtor/borrower.
SECURED OR UNSECURED GUARANTEE?
The lender will tell you whether or not it requires your guarantee to be secured or unsecured.
An unsecured guarantee means that the lender does not require a mortgage over your property to make your guarantee more secure.
A secured guarantee means that the lender requires you to grant a mortgage over some of your property to secure your guarantee. This makes it easier for the lender in the event that the debtor/borrower defaults under the loan. The lender can sell up your property if you are unable to pay the debt.
Whether your guarantee will be secured or unsecured will depend on a number of factors such as:
• whether the debtor/borrower is providing security for the loan
• the credit risk of the debtor/borrower
• your income/amount of assets.
If you provide an unsecured guarantee, your property is still at risk for payment of the debt. However, before the lender can use your property to recover the debt, the lender must get a court judgement against you.
WHAT HAPPENS IF THE DEBTOR / BORROWER DEFAULTS?
If the debtor / borrower fails to make any payment on time, the guarantor will be liable to remedy that failure, and that could involve the guarantor in payment to the lender of all amounts owed by the debtor / borrower to the lender including principal, interest, default interest and the lender’s costs of rectifying the default. The lender can exercise its rights against the guarantor even if it has not pursued the debtor / borrower.
WHAT HAPPENS IF THE GUARANTOR FAILS TO REMEDY THE DEBTOR’S / BORROWER’S DEFAULT?
If the guarantor fails to remedy any failure by the debtor / borrower to comply with the terms and conditions of the loan in any way, including the obligation to pay principal, interest, default interest, or other charges, the lender can sue the guarantor personally, and can take possession of the guarantor’s property secured to the lender and sell it to recover the amount owing together with interest and other costs, including solicitor’s costs, the costs of selling the property and the costs of maintaining the property and, if the proceeds of sale of the guarantor’s property are insufficient to satisfy the debt to the lender, the lender can sue the guarantor for the deficit.
SUING THE DEBTOR / BORROWER
If you pay out money for the debtor / borrower, you can try to sue the debtor / borrower to get your money back. But if the debtor / borrower could not repay the credit provider, he or she is unlikely to be able to repay you.
FURTHER INFORMATION
This Information Outline is provided courtesy of McKean & Park Lawyers & Consultants who are experienced in this area of law. They are located at 405 Little Bourke Street MELBOURNE VIC 3000 or call them on (03) 9670 8822 if you would like more information on the legal topic, or you wish to obtain formal advice regarding your situation.
McKean & Park was established in 1863 by James McKean and thrives today with 20 professionals specifically in all major areas of practice including Workplace Relations and Anti-Discrimination Law. The firm is proud of the fact that many of its Lawyers are accredited specialists approved by the Law Institute of Victoria. McKean & Park is committed to providing clients with comprehensive and innovative legal services delivered promptly in a professional and cost effective way.
Discharge: How and when does my bankruptcy end?
03/07/10 12:01
Discharge: How and when does my bankruptcy end?
The provider of this information is Insolvency & Trustee Services Ausralia.
DISCHARGE
HOW AND WHEN DOES MY BANKRUPTCY END?
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
June 2004 Edition
What is discharge?
Discharge is the end of bankruptcy.
When will I be discharged from bankruptcy?
Discharge from bankruptcy normally happens automatically 3 years and 1 day after your Statement of Affairs was lodged with and accepted by ITSA.
If you have been made bankrupt by the Court your Statement of Affairs was probably lodged some time after the date of bankruptcy.
There is no need to apply for discharge and there is no fee. You can get written confirmation of your discharge from bankruptcy by:
• asking your trustee
• searching the public record (the National Personal Insolvency Index or NPII database).
More information is available in the pamphlet: Searching the Public Record
In some circumstances, you can be bankrupt for longer than 3 years for reasons discussed later in this pamphlet.
What happens after discharge?
Your name will appear on the NPII forever.
The administration of your bankruptcy by your trustee may continue after you are discharged. Your trustee may not have finalized investigations or the sale of assets, or you may still have income contributions to pay.
What are my legal obligations after discharge?
• You must assist your trustee to finalise the administration of your bankruptcy.
• You must advise your trustee of changes in your address or financial circumstances if requested to do so.
• You must pay outstanding income contributions.
• Assets in your bankruptcy which have not been sold by your trustee before the date of your discharge are not automatically returned to you.
• In limited circumstances, your trustee has a time limit of 6 years after your discharge to deal with assets (other than cash).
More information is available in the pamphlet: Assets: What happens to my assets if I go bankrupt?
Your trustee is the person who administers your bankruptcy or Part X agreement; either a registered trustee or ITSA.
See the Prescribed Information booklet for definitions of other bankruptcy terms
What happens to my debts after I am discharged?
You are released from certain debts when you are discharged from bankruptcy. However, there may be some debts that you will still have to pay.
Debts you still have to pay during and after bankruptcy
1. Some debts are not provable in bankruptcy. Creditors with these types of debt cannot receive any money from your bankrupt estate but they can continue debt recovery action against you even during bankruptcy eg:
• penalties and fines imposed by a court
• damages from accidents (eg car accidents) unless, before bankruptcy, the sum of damages has been fixed by a court judgment or you have a written agreement with the other party
• student assistance/supplement loans.
2. Assets that you wish to keep but which are secured to a creditor (eg house mortgage). You will need to keep paying for these assets or the creditor will take them back.
More information is available in the pamphlet: Assets: What happens to my assets if I go bankrupt?
3. Any new debts created on or after your date of bankruptcy.
Debts you still have to pay after your discharge
Creditors of certain types of debt (provable debts) can receive money from your bankrupt estate and can also continue debt recovery action against you after you are discharged from bankruptcy eg:
• child support debts
• maintenance
• accumulated HECS (Higher Education Contribution Scheme) debts owing when you became bankrupt, excluding any amount shown on a notice of assessment issued by the Australian Tax Office (ATO) before you became bankrupt – ask the ATO if you need more information
• debts incurred by fraud.
More information is available in the pamphlet: Debts and Creditors: What happens to them if I go bankrupt
Released from debt – you are no longer liable for or have to pay this debt
Provable debt – an amount for which a creditor is entitled to claim a dividend in your bankruptcy
Can I be discharged in less than 3 years?
No. However, in some circumstances, you may be able to have your bankruptcy annulled (cancelled).
A bankruptcy can be annulled in three ways:
1. Payment in full – your creditors and your trustee’s fees and expenses have been paid in full. This usually happens because your trustee has sold assets and/or you have paid money ot your trustee from your income or another source.
2. Composition or arrangement – creditors accept an offer made by you through a trustee for finalizing your debts. This usually arises when a friend or family member helps by offering a lump sum to your creditors. The offer must also provide for payment of your trustee’s fees.
3. Application to the Court – in some limited circumstances, you may apply to the Federal Court or Federal Magistrates Service to have your bankruptcy annulled if you think you should not have been made bankrupt or should not have lodged your Debtor’s Petition. You should seek legal advice before making such an application.
More information is available in the pamphlet: Annulment: Can my bankruptcy be cancelled?
Can I be bankrupt for more than 3 years?
The period of your bankruptcy may be extended to 5 or 8 years if your trustee lodges an objection to your discharge with ITSA.
Your trustee may lodge an objection on a number of grounds, such as your failure to:
• provide information to, and assist, your trustee
• disclose to your trustee all income
• pay assessed income contributions
• explain how money was spent
• reveal all assets and creditors.
You may request a review of an objection.
More information is available in the pamphlet: Can I Appeal? Review and appeal of trustee and administrator decisions
Where to contact us
Telephone 1300 364 785
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
Debts & Creditors: What happens to them if I go bankrupt?
03/07/10 12:00
Debts & Creditors: What happens to them if I go bankrupt?
The provider of this information is Insolvency & Trustee Services Ausralia.
DEBTS & CREDITORS: WHAT HAPPENS TO THEM IF I GO BANKRUPT?
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
June 2004 Edition
How will bankruptcy affect my debts?
A debt is money that you owe to a creditor. Once you are bankrupt, creditors with debts included in bankruptcy should stop contacting you.
You must include all your debts in your Statement of Affairs, including:
• debts you owe jointly with someone else
• any loans to you from friends and relatives.
Your bankruptcy will not affect a creditor's right to pursue another person, such as:
• a person who is a guarantor for your debts
• debts in joint names with another person (eg your wife or husband).
You are released from certain debts at the end of your bankruptcy (after discharge from bankruptcy). However. there may be some debts that you will still have to pay.
Debts you still have to pay during bankruptcy
1. Debts which are not provable in bankruptcy. Creditors of this type of debt cannot receive any money from your bankrupt estate but they can continue debt recovery action against you even during bankruptcy eg:
• penalties and fines imposed by a court
• damages from accidents (eg car accidents) unless, before bankruptcy, the sum of damages has been fixed by a court judgment or you have a written agreement with the other party
• student assistance/supplement loans
2. Any new debts you run up on or after your date of bankruptcy.
Debts you still have to pay after your bankruptcy ends
Creditors of certain types of provable debt can both receive money from your bankrupt estate and continue debt recovery action against you after your bankruptcy ends eg:
• child support debts
• maintenance
• accumulated HECS (Higher Education Contribution Scheme) debts owing when you became bankrupt, excluding any amount shown on a notice of assessment issued by the Australian Tax Office (ATO) before your bankruptcy - ask the ATO if you need more information
• debts incurred by fraud.
Note: non-payment of essential services (electricity, water, telephone etc) and parking/traffic fines can cause difficulties. See Unsecured Creditors for further details.
Exempt assets are assets or property which cannot be sold in bankruptcy by the trustee
More information on assets is available in the pamphlet: Assets: What happens to my assets if I go bankrupt?
How will my creditors be affected?
Secured creditors
A secured creditor is a creditor who holds a security over your asset which entitles them to take and sell the asset if you fall behind in payments.
Examples of secured creditors include:
• Banks with a mortgage over a house
• Finance companies with a chattel mortgage, hire purchase, lease or bill of sale over a car, furniture or electrical goods
• Creditors secured by government legislation over houses and land, such as council/shire rates and water rates.
If you become bankrupt, secured creditors will probably contact you to find out what you plan to do.
If you are in doubt about whether one of your creditors is secured, you should first ask the creditor. If you are still doubtful, ask a financial counsellor or your trustee.
• If you wish to keep an exempt asset which is secured, you will need to keep paying for it or the creditor will take it back.
• A secured creditor cannot take an asset back just because you are bankrupt.
• Your trustee can sell a non –exempt asset if it is of value, even if you are paying it off (eg a house).
• In some cases creditors retain ownership of items you have bought until their debt has been paid in full (eg retention of title, consignment, commission).
• Creditors who hold a security deposit or bond (eg a landlord) are entitled to keep it to reduce your debt.
• The ATO can keep your tax refund and offset it against any debt you owe to the ATO and/or other Commonwealth office (eg Child Support Agency, Centrelink).
• If a secured creditor incurs a loss from the sale of the secured asset, they may claim the loss in your bankruptcy as an unsecured creditor.
Unsecured creditors
An unsecured creditor is a creditor who generally does not have the right to take back an item you bought but have not paid for.
Examples may include:
• banks, finance companies and credit unions for person loans, credit cards and store cards
• telephone and internet providers
• tradespeople such as builders and electricians
• professionals such as doctors and lawyers.
If you become bankrupt, any legal action by unsecured creditors against you, such as a summons, garnishee (a compulsory deduction from your income or bank account) or recovery action by a sheriff or bailiff, must stop.
If any unsecured creditors demand that you pay their debt, you should immediately tell your trustee who should inform the creditor of the terms of your bankruptcy. If you are being harassed or coerced about debts you may have rights under the Trade Practices Act. For further information visit the Australian Competition and Consumer Commission website www.accc.gov.au or call the Infocentre 1300 302 502.
Providers of essential services (eg electricity, gas, telephone, water) to your home may disconnect the service if you do not pay your current account or pay a security deposit/bond. If you later move to another home and still owe them money, you may be required to pay an increased deposit/bond to obtain the service.
In most States, if you do not pay debts for parking, traffic and other infringements of State laws, your driver’s licence and/or your motor vehicle registration may be suspended until payment is made. Bankruptcy does not stop such suspensions.
Debts and creditors can be difficult to sort out. Talk to a financial counsellor or ITSA if you are unsure about what type of debts or creditors you have. ITSA offices can provide you with a list of advisers (see rear cover or www.itsa,gov.au)
Where to contact us
Telephone 1300 364 785
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
Can I Appeal? Review and appeal of trustee and administrator decisions
03/07/10 12:00
Can I Appeal? Review and appeal of trustee and administrator decisions
The provider of this information is Insolvency & Trustee Services Ausralia.
CAN I APPEAL?
REVIEW AND APPEAL OF TRUSTEE AND ADMINISTRATOR DECISIONS
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
January 2004 Edition
About Bankruptcy Regulations
Bankruptcy Regulation is an independent branch of ITSA which reports directly to the Inspector-General in Bankruptcy.
It is responsible under the Bankruptcy Act for monitoring the standards of trustees and debt agreement administrators.
Its role includes, on behalf of the Inspector-General in Bankruptcy, dealing with requests for review of certain decisions made by trustees and dealing with complaints against trustees and administrators.
If Bankruptcy Regulation is unable by law to help, it will advise you of your options, such as making an application to the Court.
See the Prescribed Information booklet for definitions of bankruptcy terms
ITSA (Insolvency and Trustee Service Australia) is a Commonwealth government agency. ITSA is the trustee when a registered trustee is not appointed.
Review procedures
Trustees
Trustees may make decisions which affect the rights of people whose estates are being administered under the Bankruptcy Act, their creditors and other people.
If you have a query or concern about a trustee decision you should first contact them directly to seek resolution. If you do not resolve the matter you may be able to use the review process within the Act.
You may ask for a review of certain decisions:
• in the first instance to your local Bankruptcy Regulation office (see rear cover)
• at a later stage, if required, to the Administrative Appeals Tribunal.
Other decisions may be reviewed by an application to the Court.
Debt agreement administrators
If you are a debtor, a creditor or someone who is party to a specific Debt Agreement and you have a query or concern about the conduct of an administrator you should first contact them directly to seek resolution. If you do not resolve the matter you may refer it to Bankruptcy Regulation.
More information is available in the pamphlet:
Resolving Complaints about Trustees and Administrators
Decisions which can be reviewed
Bankruptcy Regulation may review the following decisions made by a trustee:
• filing of a notice of objection to discharge
• issuing an income contribution assessment
• rejecting a hardship application with respect to an income contribution assessment
• rejecting an application for early discharge (applies only to bankruptcies occurring prior to 5 May 2003.
Bankruptcy Regulation must also review such a decision if requested by the Ombudsman.
You have a 60 day time limit from the date the trustee informs you of their decision in which to loge a request for review.
You cannot apply to the Administrative Appeals Tribunal for review unless:
• a prior review request has been made to Bankruptcy Regulation
• the review request has been assessed.
Bankruptcy Regulation does not have the authority to review any other decision made by a trustee, such as:
• selling an asset (eg house, property, stock, plant and equipment, motor vehicle etc)
• admitting/rejecting a proof of debt.
If you are unable to resolve the matter with the trustee, and the decision cannot be reviewed by Bankruptcy Regulation, your only remedy may be to apply to the Court.
For example, a creditor or bankrupt may apply to the Court for a review of a decision by a trustee to admit or reject a proof of debt. The application to the Court must be made within 21 days form the date of the decision.
What documentation do I need?
Your request to Bankruptcy Regulation for a review must be:
• in writing and lodged with Bankruptcy Regulation, and
• accompanied by:
i. a copy of the document showing the trustee’s decision
ii. an explanation of why you consider the decision should be reviewed
iii. any documents to support your request.
Time period of review
Bankruptcy Regulation must decide within 60 days after you lodge a request for review whether to review the decision and, if so, make a decision on the review.
What does it cost?
There is no charge for a review undertaken by Bankruptcy Regulation.
How is my request handled?
Your request for a review will be acknowledged in writing within 7 days of receipt.
Bankruptcy Regulation will contact the trustee to find out if further documents are available to assist the review process.
You may need to provide further documents to enable the process to proceed.
If the investigation of your review is not finalized within 28 days, you will be informed of the progress of the investigation.
Where Bankruptcy Regulation has not made a decision within 60 days, it is taken to have reviewed the trustee’s decision and confirmed it.
If your review request is not upheld, Bankruptcy Regulation will advise you of your further rights of appeal.
Decision in writing
Bankruptcy Regulation will provide you and the trustee with a written decision.
Review of Trustee’s Fees
A creditor or bankrupt dissatisfied with a registered trustee’s claim for fees and costs may request the Official Receiver for a review. This is called a ‘taxing of costs’. The request must be made within 28 days of you becoming aware of the amount of the claim. Generally the person who requests that the claim be taxed will bear the costs of taxation which is charged at an hourly rate. If taxation results in a reduction of at least 15% in the amount of a claim, the trustee must bear the costs of the taxation.
ITSA’s trustee fees imposed in a bankruptcy may be waived or remitted by application to the Inspector-General in Bankruptcy. The grounds for remission of waiver are that:
• payment of the fee will cause undue hardship to the person liable to pay the fee; or
• there are exceptional circumstances in which it is proper and reasonable to do so.
Applications, in writing, may be sent to Bankruptcy Regulation (see rear cover) or any ITSA office. A decision will be made usually within 28 days of an application.
What else can Bankruptcy Regulation help with?
If you have a complaint relating to the actions of a trustee, debt agreement administrator or a controlling trustee, you should follow the procedure set out in the pamphlet: Resolving Complaints about Trustees and Administrators
Further information about what you can expect from Bankruptcy Regulation and ITSA generally is available in the Client Service Charter
Where to contact us
ITSA website wwwitsa.gov.au
For more information please contact a Bankruptcy Regulation Office
Queensland and NT
Bankruptcy Regulation
PO Box 10443, Adelaide St
Brisbane QLD 4000
Ph: 07 3360 5425
Fax: 07 3360 5402
email: br.qld@itsa.gov.au
New South Wales and ACT
Bankruptcy Regulation
Level 8, 135 King St
SYDNEY NSW 2000
Ph: 02 8233 7857
Fax: 02 8233 7805
email: br.nsw@itsa.gov.au
Western Australia
Bankruptcy Regulation
GPO Box H536
Perth WA 6001
Ph: 08 9268 1204
Fax: 08 9268 1287
email: br.wa@itsa.gov.au
Victoria and Tasmania
Bankruptcy Regulation
Level 10, 360 Elizabeth St
MELBOURNE VIC 3000
Ph: 03 9272 4800
Fax: 03 9272 4940
email: br.vic@itsa.gov.au
South Australia
Bankruptcy Regulation
GPO Box 2604
ADELAIDE SA 5001
Ph: 08 8112 4315
Fax: 08 8112 4304
email: br.sa@itsa.gov.au
Assets: What happens to my assets if I go bankrupt?
03/07/10 11:59
Assets: What happens to my assets if I go bankrupt?
The provider of this information is Insolvency & Trustee Services Ausralia.
ASSETS – WHAT HAPPENS TO MY ASSETS IF I GO BANKRUPT?
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
June 2004 Edition
What are assets?
Assets or property are anything you own when you become bankrupt or anything you buy or receive before the end of your bankruptcy. Income you earn during bankruptcy is not included but will be taken into account in your income contributions assessment.
More information is available in the pamphlet: Income Contributions
Going bankrupt will affect your assets.
Some assets are exempt, which means you may keep them.
Some assets are non-exempt or divisible, which means your trustee may sell them for the benefit of your creditors.
What assets may 1 keep?
The Bankruptcy Act sets out a list of exempt or protected assets, for example:
• most ordinary household or personal items, such as clothes, furniture, kitchen appliances and equipment, a TV, video recorder, stereo, washing machine, and items mainly for the use of children or students in the house
There are circumstances where some of these things would be sold, such as antique furniture, and electrical equipment of significant value.
• tools used to earn an income, up to a limit of $2,900 (indexed) - tools over this limit may be sold by your trustee
Indexed means the amount regularly changes in line with the Consumer Price index or the base pension rate
• vehicles (cars or motorbikes) used mainly for transport, up to a combined limit of $5,800 (indexed). The limit refers to your equity in the vehicles (the value of the car minus the sum owing under finance)
• superannuation and life assurance policies up to the pension Reasonable Benefit Limit (as worked out under the Income Tax Assessment Act 1936)
• compensation for a personal injury (eg from a car accident or workers compensation)
• assets bought with protected monies
Protected monies are monies that cannot be claimed by a trustee eg personal compensation money, certain government grants
• re-establishment grants to farmers, including grants under the Rural Adjustment Act 1992 or Farm Household Support Act 1992
• property protected under the Defence Service Homes Act 1918
• an asset held by you in trust for another person (eg a child’s bank account).
Awards of a sporting, cultural, military or academic nature made to you, such as medals or trophies but not cash or jewellery, and claimed as having sentimental value may be exempted by a vote of creditors.
If you are buying an exempt asset under finance, you will only be able to keep it if you continue to pay for it.
Warning:
There are penalties if you fail to:
• disclose assets on your Statement of Affairs
• disclose to your trustee in writing within 14 days any assets you acquire during bankruptcy.
What assets will my trustee deal with?
Your trustee will sell or distribute your non-exempt (divisible) assets and any assets that have a value over a specified limit.
Your assets include those you own when you become bankrupt, or any you acquire or receive before the end of your bankruptcy.
These assets may be in:
• Australia or overseas
• your possession or someone else’s.
Examples of divisible assets include:
• houses, apartments, land, farm and business premises (including leases)
• cars, trucks,vans, caravans, trailers, motorbikes, boats and aircraft
• shares and other investments (including shares held in your employer’s business)
• tax refunds for income earned before you became bankrupt
• money owed to you
• livestock and farming crops
• your right as a beneficiary in a deceased estate, even if the person dies during your bankruptcy
• antiques, collectables and jewellery
• business and business assets, including goodwill, stock, equipment, machinery, vehicles, fixtures and fittings and an interest in a partnership
• leaseholds, franchises, licences and patents
• a right to commence or continue legal proceedings/legal actions
• money with deposit taking organizations (eg banks, credit unions, licensed totalisator/betting agencies)
• lottery winnings and other competition prizes.
Warning:
You may be liable for Capital Gains Tax in some cases.
What about assets I own with another person?
If you have a share in a non-exempt asset, for example a house, your trustee can sell your share. If the co-owner is not also bankrupt, the trustee may agree to sell your share to them, but it would have to be for at least as much as the trustee could get from selling it on the open market.
If an agreement cannot be reached with the other owner, the trustee may apply to the Court for an order to sell the property.
What does my trustee do with the money obtained from my assets?
Your trustee’s aim is to pay your creditors and his or her own fees and expenses plus the government realisations charge.
Your trustee will sell an asset if there will be an expected surplus after selling costs and expenses and any debts owed to a secured creditor are taken out.
The balance (surplus) is kept by the trustee for the benefit of your other creditors.
Payments to creditors are called dividends.
Example:
House property $190,000
less secured creditors
council/shire rates 4,000
bank mortgage 145,000
less costs of sale
legal costs 1,000
advertising 1,000
agent's commission 6,000
Surplus $33,000
Trustee fees and expenses plus the government realisations charge will be paid out of the $33,000 and the balance distributed as dividends to creditors.
Can my creditors take my assets?
Secured creditors who hold a security over an asset may take and sell the asset if you fall behind in payments. Bankruptcy does not affect the rights of secured creditors.
Common examples of secured assets are:
• a house subject to a mortgage with a bank
• a motor vehicle subject to a bill of sale
• goods under hire purchase, chattel mortgage, lease or bill of sale with a finance company
• assets with creditors secured by government legislation over houses and land, such as council/shire rates and water rates.
If you are in doubt about whether one of your creditors is secured, you should first ask the creditor. If you are still doubtful, ask. a financial counsellor or your trustee.
A list of financial counsellors and other advisors is available from ITSA offices (see rear cover) or from ITSAs website www.itsa.gov.au.
• If you wish to keep an exempt asset which is secured, you will need to keep paying for it or the creditor will take it back.
• A secured creditor cannot take an asset back just because you are bankrupt.
• Your trustee can sell a non-exempt (divisible) asset if it is of value, even if you are paying it off (eg a house).
• In some cases creditors retain ownership of items you have bought until their debt has been paid in full (eg retention of title, consignment and commission).
More information is available in the pamphlet Debts and Creditors: What happens to them if go bankrupt?
More information on trustee fees is available in the pamphlet: ITSA Statutory Fees & Charges
What about assets I used to own?
Trustees will investigate assets you owned in the 5 years before bankruptcy. If they find that you have given away or sold assets for less than their true value, they may recover these assets.
Your trustee may also recover any assets that have been transferred for the purpose of defrauding your creditors (including assets transferred more than 5 years before bankruptcy).
What happens to my assets when I am discharged from bankruptcy?
Your trustee keeps any non-exempt assets which have not been sold before your discharge (end of bankruptcy). Your trustee may have been unable to sell your assets straight away; it may take some years.
In limited circumstances, your trustee has a time limit of 6 years after your discharge to deal with assets (other than cash). The 6 year limit only applies to:
• assets disclosed in your statement of affairs, and
• assets acquired by you during bankruptcy, where you disclosed them in writing to your trustee within 14 days of you becoming aware of them.
The 6 years do not begin until at least the date of your discharge from bankruptcy.
Your trustee is able to extend this 6 year time limit by giving you written notice.
If all your creditors and trustee's fees and expenses have been paid in full, any remaining assets will be returned to you.
Where to contact us
Telephone 1300 364 785
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
Annulment: Can my bankruptcy be cancelled?
03/07/10 11:58
Annulment: Can my bankruptcy be cancelled?
The provider of this information is Insolvency & Trustee Services Ausralia.
ANNULMENT
CAN MY BANKRUPTCY BE CANCELLED?
Reproduced by express permission form the Commonwealth Government, Insolvency and Trustee Services Australia.
December 2004 Edition
What is an annulment?
Annulment is the cancellation of bankruptcy before the end of the normal 3 year period.
Bankruptcies are usually annulled:
• if the creditors’ debts and trustee’s expenses and fees have been paid in full, or
• if creditors have accepted an offer of something less than payment in full (a composition or arrangement), or
• by application to the Court, in some limited circumstances.
Effects of an annulment
• your annulment is recorded on the National Personal Insolvency Index (NPII) database and is available to the public. Your name will appear on the NPII forever.
More information is available in the pamphlet: Searching the Public Record
• you will need to contact commercial credit reference agencies to record the annulment.
• assets not needed by your trustee to pay your creditors or expenses and fees may be returned to you.
More information is available in the pamphlet: Assets: What happens to my assets if I go bankrupt?
Annulment does not release you from:
• maintenance orders
• debts incurred by fraud
• prosecution for bankruptcy offences.
Annulment by payment in full
• your bankruptcy may be annulled if:
• your creditors, and
• any interest payable on debts to creditors, and
• realisations charge, and
• your trustee’s expenses and fees have all been paid in full
The money required for payment in full usually comes from the sale of assets by your trustee or from a source not otherwise available to the trustee, such as money provided by a relative.
Your trustee will be able to advise you of the approximate sum required for payment in full. The exact sum will not be known however until all creditor’s claims, including interest, are resolved and your trustee’s fees and expensed are paid.
Your bankruptcy will be annulled on the date the final payment is made from your bankruptcy.
An asset is anything a person owns before going bankrupt, or buys or receives during bankruptcy
A bankruptcy offence occurs when the bankrupt does not carry out an obligation under the Bankruptcy Act. They may be prosecuted and fined or imprisoned
Realisations charge is a Commonwealth Government levy on all bankruptcies, compositions or arrangements. It is taken out before expenses, fees and dividends
Your trustee is the person who administers your bankruptcy or Personal Insolvency Agreement; wither a registered trustee or ITSA
See the Prescribed information booklet for definitions of other bankruptcy terms
Annulment by a composition or arrangement during bankruptcy
Compositions and arrangements are offers made by bankrupts through their trustees to finalise their debts. The creditors vote on whether to accept such offers.
An offer:
• may involve assets already in the bankruptcy and
• needs to include other money or assets that would not normally be available to creditors, such as money provided by a relative.
These offers benefit creditors as they receive a dividend that would not otherwise be available. All creditors will receive an equal rate of dividend unless your offer provides otherwise.
Your written and signed offer must:
• set out the terms
• be lodged with the trustee
• provide for payment of the trustee’s fees and expenses.
Before finalising your offer and asking your trustee to call a creditor’s meeting to formally consider the offer, you should:
• discuss with your trustee if there are any legislative requirements that may affect your offer
• discuss any proposed offer with major creditors to find out if it is acceptable.
Your trustee may:
• refuse to call a meeting if the proposal does not provide for payment of trustee’s fees that have been approved by creditors but are unable to be taken out of the estate
• require a deposit to cover the expenses and fees of the meeting.
Any money component of the offer will be held in trust until your offer is accepted by creditors.
Creditor’s meeting
Your trustee may call a meeting of creditors to consider and vote on your offer.
The trustee will advertise this meeting and certain debtor information in a national and a regional newspaper
Each creditor will be sent:
• a notice and agenda of the meeting
• a copy of your offer
• your trustee’s report
Your trustee will be able to give you more information on how meetings are conducted.
You must attend the meeting if requested by your trustee.
As an alternative to holding a meeting the trustee may invite creditors to vote on the offer in writing if:
• the offer is straightforward and not expected to be varied or subject to further negotiation, and
• no creditor objects
Trustee’s report
The report to creditors must state whether they will benefit if the offer is accepted and tell them:
• who is providing the funds
• the expected dividend
• the trustee’s fees and expenses
• details of assets, realisations and dividends
• details of your conduct and financial dealings.
A dividend is an amount paid to a creditor by a trustee to settle a debt. It is usually less than the amount originally owed to the creditor
Creditor’s acceptance
For your proposal to be accepted your trustee must receive ‘yes’ votes from:
• a majority in number of the creditors who vote
and
• at least 75% in $ value of the creditors who vote.
If your offer is accepted
Your bankruptcy will be annulled immediately on acceptance of the offer by your creditors.
Your trustee’s fees, the government realizations charge and the creditors will be paid according to the terms of your composition or arrangement.
Details of your annulment are recorded on the NPII and are available to the public.
All creditors with debts that can be claimed in your bankruptcy are then bound by the terms of the offer.
More information is available in the pamphlet: Debts and Creditors
If your offer is rejected
If your offer is rejected your bankruptcy will continue.
Your trustee will:
• keep funds covering the expenses and fees of calling the meeting from any deposit
• refund any money provided for the offer.
Enforcement of the composition or arrangement
The provisions of the offer may be enforced by the Federal Court or the Federal Magistrates Court on an application by an interested person. Disobedience of an order of the Court is contempt and is punishable accordingly.
How is a composition or arrangement varied?
Creditors, with your written consent, can vary the terms by passing a special resolution. If you wish to vary the terms you can make a written request to your trustee. The trustee sends notice to the creditors and, if there is no objection in writing, he or she can vary the terms. If a creditor objects, a creditors’ meeting can be called to consider the proposed amendment. For the proposed variation to be accepted, it must be passed by a special resolution of creditors.
Special resolution – A majority in number of the creditors who vote and at least 75% in $value of the creditors who vote
Setting aside a composition or arrangement
Only the Court can set aside a composition or arrangement where:
• it is unreasonable
• it does not comply with the Bankruptcy Act or Regulations
• false or misleading information has been provided
• there is any other reason that the Court sees fit.
In these cases the composition or arrangement is set aside on the basis that it should not have been accepted initially.
The Court may also make you bankrupt.
Court – The Federal Court or the Federal Magistrates Court
Termination of a composition or arrangement
The Court can terminate a composition or arrangement on application from you, a creditor or the trustee where:
• there is a likely injustice or delay to creditors
• you fail to carry out its terms and termination would be in the interests of creditors
• there is any other reason that the Court sees fit and termination would be in the interests of creditors.
The Court may also make you bankrupt.
If the trustee is satisfied that you are in default, a composition or arrangement can be terminated:
• without holding a creditors’ meeting if all creditors do not object to the trustee’s notice of the proposed termination
• by creditors, by ordinary resolution at a special meeting called to consider the termination.
A composition or arrangement can also be terminated by an event specified in the agreement as causing termination
Ordinary resolution – A majority in number of the creditors who vote
Application to the Court
If you think that you should not have been made bankrupt or should not have lodged your Debtor’s Petition, you may apply to the Court to have your bankruptcy annulled. These applications are rare and you should seek legal advice before making such an application.
Where to contact us
Telephone 1300 364 785
ITSA website wwwitsa.gov.au
ITSA Offices
ACT
Level 2, NFF House, 14-16 Brisbane Avenue BARTON ACT 2600
Tel: 1300 364 785
Fax: (02) 6270 3608
email: itsa.canberra@itsa.gov.au
New South Wales
GPO Box 548 SYDNEY NSW 2001 Level 8, 135 King Street SYDNEY NSW 2000
Tel: 1300 364 785
Fax: (02) 8233 7891
email: itsa.sydney@itsa.gov.au
Queensland
Brisbane
PO Box 10443 Adelaide Street BRISBANE QLD 4001
Level 16, 340 Adelaide Street BRISBANE OLD 4000
Tel: 1300 364 785
Fax: (07) 3360 5466
email: itsa.brisbane@itsa.gov.au
Townsville
PO Box 1527 TOWNSVILLE QLD 4810 Level 1,
National Australia Bank Building 315 Ross River Road AITKENVALE OLD 4814
Tel: 1300 364 785
Fax: (07) 4727 0500
email: itsa.townsviIIe-0itsa.gov.au
South Australia/Northern Territory
GPO Box 2604 ADELAIDE SA 5001
Level 18, Grenfell Centre 25 Grenfell Street ADELAIDE SA 5000
Tel: 1300 364 785
Fax: (08) 8112 4305
email: itsa.adelaide@itsa.gov.au
Tasmania
GPO Box 850 HOBART TAS 7001
Level 4, ANZ Centre 22-26 Elizabeth Street HOBART TAS 7000
Tel: 1300 364 785
Fax: (03) 6221 7700
email: itsa.hobart@itsa.gov.au
Victoria
Level 10, Melbourne Central 360 Elizabeth Street MELBOURNE VIC 3000
Tel: 1300 364 785
Fax: (03) 9272 4900
email: itsa.melbourne@itsa.gov.au
Western Australia
GPO Box H536 PERTH WA 6841
Level 12, Durack Centre 263 Adelaide Terrace PERTH WA 6000
Tel: 1300 364 785
Fax: (08) 9268 1298
email: itsa.perth@itsa.gov.au
More information pamphlets are available.
See the website or contact ITSA for a complete list.
