You can become bankrupt in Australia several ways, either you can file for bankruptcy voluntarily and file a debtor’s petition or you can be made bankrupt by the Court which is known as a creditor’s petition.

Court Bankruptcy – creditor’s petition

You can be made bankrupt by the bankruptcy court if a creditor files a creditors’ petition. A creditor can apply to court for a sequestration order (Section 43 of the Bankruptcy Act) by filing a creditor’s petition with the Federal Court of Australia. The bankruptcy court will accept the application if you have failed to comply with a bankruptcy notice. A creditor may only file a creditors petition, if

• the petitioning creditor is owed at least $5,000; and
• you have committed an act of bankruptcy within the last 6 months; and
• the petitioning creditor has issued a bankruptcy notice which you have not complied with; and
• A creditor applying to the bankruptcy court for a sequestration order may appoint a trustee of their choosing.

 

Who appoints the Trustee in bankruptcy?

With a court bankruptcy the creditor who files the creditor’s petition with the bankruptcy court will usually obtain a consent to act from a Registered Trustee. It is important to observe that the creditor applying to court for your bankruptcy will therefore have full control over selecting and appointed the Trustee in Bankruptcy. If the creditor does not obtain a consent to act from a Registered Trustee, then the Official Trustee from AFSA will automatically be appointed when the sequestration order is made. The Official Trustee from AFSA can then outsource the appointment to a Registered Trustee at their discretion.

If you would like to avoid becoming bankrupt by way of a creditor’s petition call the Australian Bankruptcy Service on 1800 462 767.

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