BANKRUPTCY

Question 1

What is insolvency?

Answer 1

It is when a person is in financial distress and cannot pay their debts

Question 2

What is bankruptcy?

Answer 2

Bankruptcy is a legal proceeding or court order, it is when the court gives the official assignee power to control the debts.

Question 3

What is an act of bankruptcy?

Answer 3

An act of bankruptcy is categorised into 4 areas.
1. The debtor conceals or disposes of property. (Not in legislation for exam)
2. S22 - debtor avoids creditor with intention to delay or defeat payment of debts.
3. S23 - the debtor shows insolvency
4. S17 - Failure to comply with bankruptcy notice

Question 4

Step 7: Prior to the hearing what must be filed?

Answer 4

Step 7 - prior to the hearing you must file an affidavit of service of summons to the debtor with a copy of the creditors application of adjudication order attached.

Question 5

What are the two ways someone can become bankrupt?

Answer 5

1. Debtor initiated (voluntarily) by applying through the official assignee
2. Creditor intiated (involuntary) High court order

Question 6

What are the alternatives to bankruptcy?

Answer 6

Legislation in exam provided
1. 343 no debt repayment
2. 363 no asset procedure

Question 7

When is bankruptcy discharged?

Answer 7

S290 automatic discharge

Question 8

What are 4 mandatory information in order to file a bankruptcy notice?

Answer 8

1. The judgment debtors full address
2. Amount and date to match the certificate of judgment and cost of certificate
3. Interest rate calculated by the MOJ civil debt calculator
4. The costs of serving and preparing the notice

Question 9

What is the overarching responsibility of bankruptcy?

Answer 9

Section 138 - to assist in sale and distribution

Question 10

What is the purpose of a bankruptcy notice?

Answer 10

Bankruptcy notice gives 10 working days to either party to pay the debt or apply to the high court to set aside the bankruptcy notice.