People often wonder if a creditor can force them into bankruptcy. The short answer is yes but, like most of the procedures and laws surrounding bankruptcy and insolvency, the full answer is a bit more complicated.

A creditor can only force someone into bankruptcy by applying to the Court. The Court will look at the request made by the creditor and, if all the conditions have been met.

This option is only used as a last resort for creditors and so the process that must be met for someone to force you into bankruptcy is quite detailed.

Initially, a creditor must have obtained a judgment against you in the last 6 years for an amount of at least $10,000. If this condition is met, the creditor can approach AFSA and apply for a bankruptcy notice to be issued. This notice will give you 21 days to repay the debt owed to you. If you fail to meet this obligation, the creditor can then apply to Court for a creditor’s petition to be issued against you.

Once a creditor’s petition has been issued by the Court, a hearing will be set by the Court. At the hearing, if the Court decides that you have not fulfilled your obligations and paid the creditor, the Court can issue a sequestration order which makes you bankrupt. The Court will also appointed a trustee to administer your bankrupt estate.

If a creditor obtains a bankruptcy notice or a creditor’s petition against you, we strongly recommend that you speak to a qualified expert immediately upon receipt. Nobody wants to go through Court or have a sequestration order issued against them, but many people do not know the options available to them that might help them avoid such a difficult situation. At the Australian Bankruptcy Service, we have highly qualified staff ready to take your call. Call now on our toll free telephone line 24 hours everyday / 7 days a week on 1800 462 767.

All calls are free, entirely confidential and if required, anonymous.