Be careful when choosing a Bankruptcy Trustee

Becoming a Bankrupt person, whether ofyour own choosing or not, is never a pleasant experience. Even if it is the best option for you and can actually improve your day-to-day life, the social stigma of Bankruptcy is felt very keenly by many people. It is desirable, then, for the process to go as smoothly as possible, and choosing the right Bankruptcy Trustee is an important part of this.

The only point at which you can choose your own Bankruptcy Trustee is right at the beginning, and it is only an option if you make yourself a Bankrupt by lodging a Debtor’s. Once you are Bankrupt, it is only your creditors or the Trustee who can initiate a change of Trustee.

This change can occur in one of two ways:

1. The Trustee agrees to the change & issues a notice under Sect 181A of the Bankruptcy Act. The change of trustee will occur unless a creditor objects in writing before the date outlined in the notice; or

2. The creditors force a change of Trustee by requesting that the incumbent Trustee call a meeting of creditors to vote on the change. The meeting of creditors to vote on a change can be initiated by a creditor (or a group of creditors who hold at least one quarter, ie 25% of the total debts in the estate). The authority for the creditors is contained in Sec 64 (1) of the Bankruptcy Act. Once the meeting is called, all creditors will be asked to vote on the change of trustee under Sec 181 of the Bankruptcy Act and if fifty precent (50%) of the creditors voting approve the change, then it will occur.

So if you are having difficulties with your Bankruptcy Trustee you are, unfortunately, powerless to change unless you can either convince them to step down, or your creditors force the change because they are also unhappy with the way your Bankruptcy is being administered.

If you are considering bankruptcy and wish to choose your own Trustee, then, you will want to make sure that you choose the right one from the very beginning. Some enquiries you can make of any prospective Trustees are:

  • How long have you been registered with AFSA?
  • How long have you been operating in the industry?
  • What qualifications do you hold?
  • Who will be responsible for handling my case?
  • Will I be assigned a dedicated manager who I can liaise with as the need arises?

If you are considering appointing a private trustee, call our trustee at the Australian Bankruptcy Service on 1800 462 767.




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