Many people are threatened with bankruptcy by their creditors when they are unable to make their payments, and sometimes it is hard to know whether it is just a threat, or a potential reality. The safe answer is yes, a creditor can force you into bankruptcy – but there are certain conditions and processes to be met first.

A creditor can only petition to have you made bankrupt if you owe them at least $5,000 and they have a court judgement to back up the debt. Of course, this does not mean that you can neglect your smaller bills; it is quite easy for a debt to increase with interest and charges.

When a creditor has good cause to petition for your bankruptcy they will first need to apply to court for a judgement to be issued.  If after some time the judgement remains unpaid, they can then apply to AFSA for a Bankruptcy Notice to be issued against you. You will have 21 days to respond to a bankruptcy notice and payment in full is the only way to stop a creditor from proceeding to the next step. If you do not pay within 21 days, then the creditor can apply to the court for a Creditor’s Petition to be issued. When the due date for the Creditor’s Petition runs out with no satisfactory response, you will then be made bankrupt by the court and a Bankruptcy Trustee will be appointed to you.

If you are receiving demands for payment that you cannot meet, you should call us here at the Australian Bankruptcy Service for advice. It could be that your creditors will soon begin the process of having you made bankrupt. And if you have already received a Bankruptcy Notice or a Creditor’s Petition, it is vital that you get professional help before time runs out. We can advise you of the entire process and what is likely to happen, and in some circumstances, we may even be able to help prevent bankruptcy by proposing another arrangement. Don’t delay and call us today on 1800 462 767.