Bankrupt – what can and can’t you do?
What Does It Mean to Be Bankrupt?
Bankruptcy has serious effects on the individual. Upon becoming bankrupt means that almost all of their property goes to (‘vests in’) the person’s Trustee in Bankruptcy.
How Does Going Bankrupt Work?
It is then an offence for an undischarged bankrupt person to:
a) Obtain credit or enter a commercial transaction for value in excess of $4,623 without disclosing that they are bankrupt.
b) Carry on a business under an assumed name without disclosing the true name and status of bankruptcy.
c) Leave Australia or do any act to prepare to leave Australia without the permission of the person’s Trustee in Bankruptcy.
Property acquired by the person after being made Bankrupt but before being discharged from Bankruptcy is generally divisible among creditors.
Bankrupt Partnership Explained
If the bankrupt party was in a partnership, this partnership is automatically dissolved by becoming bankrupt unless specifically agreed in the partnership agreement to be otherwise.
The bankrupt party cannot:
a) Be a director of a company.
b) Be a member of the Local Council, a Member of House of Representatives or the Senate or a member of the State or Territory Houses of Parliament.
c) Commence any civil action. Any action commenced before they became bankrupt is “stayed” until the Trustee elects to pursue or discontinue the action.
Streeterlaw has extensive experience in dealing with bankrupt companies or companies going bankrupt and predominantly acts for creditors.
Contact Streeterlaw’s Sydney Debt Recovery Lawyers and speak to a senior insolvency solicitor to obtain a no-obligation phone consultation.
See also What is Bankruptcy?