There is often confusion about how the bankruptcy process works. When we meet with clients we provide details of the bankruptcy process and how it will impact them. This article also provides a brief overview.
Once a person is made a bankrupt, a Bankruptcy Trustee is appointed to sell certain of their assets. Our previous article provides details of what assets can be sold. Any surplus funds recovered will be distributed to the creditors of the bankrupt.
Depending on the amount of income a bankrupt earns they may be required to pay contributions to their Bankruptcy Trustee for the 3-year bankruptcy period. If you are considering bankruptcy, you can use our Bankruptcy Income Contribution Calculator for an estimate of how much income contribution that you may be liable for.
More information on bankruptcy and its process can be found here.
Having Difficulty Understanding The Bankruptcy Process?
There are some bankrupts who find it difficult to understand the bankruptcy process and wonder whether they have been treated fairly by the Bankruptcy Trustee. Some may have deep-rooted misunderstandings with the Bankruptcy Trustee and find it difficult to deal with them.
If this sounds familiar, we can assist. As experienced Bankruptcy Trustees, we understand the duties of fellow Bankruptcy Trustees and the process of a bankruptcy. We will be able to communicate, or even negotiate on your behalf, with your Bankruptcy Trustee on any issue that may arise during the course of bankruptcy. This can include disputes on income contributions payable and dealing with potential claims for voidable transactions.
Example of How We Helped A Client
We recently assisted a bankrupt client in communicating and dealing with his Bankruptcy Trustee. When we were approached, the relationship between the client and the Bankruptcy Trustee had irretrievably broken down. The client was having issues with, among other matters, the Bankruptcy Trustee’s assessment in relation to his income contribution liability, which resulted in the Bankruptcy Trustee objecting to his discharge extending his bankruptcy to 8 years.
Once we were appointed, we reviewed our client’s financial affairs and proceeded to set them out in a way that is clear to the Bankruptcy Trustee. With our assistance, the client managed to rightfully reduce his income contributions and we negotiated a payment schedule that was suitable to the client. As the payment was to be made by the bankrupt’s wife, we provided advice on the mechanism of payment to avoid such payment being considered as further income of the bankrupt. This also resulted in the Bankruptcy Trustee’s withdrawal of the objection to discharge, thus reducing the period of bankruptcy.