Concept of bankruptcy

Question 1

What is bankruptcy

Answer 1

Personal insolvency is covered by the Bankruptcy Act 1966 and referred to as bankruptcy

Question 2

Two types of creditors

Answer 2

Secured creditors has to right to seize and sell some assets
Unsecured creditor has no right to seize and sell assets of debtor

Question 3

Declaration of intention to present a debtor’s petition

Answer 3

presenting a debtor petition is to give the debtor time to enter an agreement with the creditors to repay the money owing and to avoid bankruptcy

Question 4

Debt agreement

Answer 4

A debt agreement may provide the debtor to pay a lump sum that is less than they owe or pays off debt in instalment

Question 5

Voluntary agreement

Answer 5

A person who is unable to make repayment agreement with his/her creditor can petition for bankruptcy

Question 6

Involuntary agreement

Answer 6

Involuntary bankruptcy occurs when a creditor applies to a court to have person made bankrupt