CREDITORS CAN BANKRUPT YOU. PART 2 OF 2.

WHAT IS THE PROCESS THAT A CREDITOR MUST FOLLOW TO MAKE YOU BANKRUPT?

There are a few ways by which you can be make bankrupt but they all rely on the court being satisfied that a creditor is owed money and that you have committed an act of bankruptcy. The most common process followed by creditors are.

1. Issue of a Bankruptcy Notice.
A creditor requests ITSA to issue a bankruptcy notice against you demanding that you pay the money owed to the creditor within 21 days. A notice can only be issued if the creditor has obtained a court judgment against you within the last six years and the total amount owing under the judgment or two judgments combined, is not less than $2000.

2. Creditor Petitions the court.
If you do not pay the creditor by the time given in the notice, you commit an act of bankruptcy. A creditor can then apply to the court (creditor's petition) to have you made bankrupt. The court gives you the opportunity to be heard before making the order.

3. Court makes a Sequestration Order.

If after hearing the creditor's case and any submissions you make, the court is satisfied that you have not paid the creditor, the court makes an order (sequestration order) making you bankrupt. A trustee is appointed and you are then required to file a Statement of Affairs with ITSA within 14 days of being notified of the order.

WARNING:
The information provided above is regarding general process followed by most creditors in applying to make someone bankrupt.
If the creditor is currently taking steps to make you bankrupt and you wish to avoid bankruptcy or alternatively you dispute the creditor's claim/s it is important that you seek independent legal advice. As soon as Possible.