BANKRUPTCY AND INSOLVENCY – KEY DIFFERENCES
Whilst both similar in terms of the emotional distress they elicit, bankruptcy and insolvency are vastly different financially and in legal proceedings. Insolvency defines a situation in which one is unable to pay debts. Bankruptcy is an option that can arise from insolvency. While stressful, bankruptcy provides a (often temporary) release from debt and insolvency. It does, however, create grave ramifications – it will last on your record for five years, impacting future financial prospects. You will also be permanently registered on the National Personal Insolvency Index (NPII), which is a publically available record of personal insolvency matters.
As explained above, bankruptcy can be actioned as a relief from insolvency. It can be voluntary or involuntary, meaning either entered by a debtor or filed by the creditor. If you are the party entering bankruptcy, this option places you into a legal state where a trustee is appointed to oversee your financial affairs. Although you are (temporarily) released from your debts, you are also released from financial autonomy. We can help you navigate this difficult area of law and help reduce the detrimental impact it may cause.
Conversely, if you are owed money by an individual, we can assist you in producing a creditor’s petition, which is essentially a forced (involuntary) bankruptcy. This can be enacted if a debtor owes you upwards of $5,000.00. If successful, this will lead to a sequestration order being produced. This is a court order for bankruptcy. With our help, we can ensure that debt recovery is fulfilled without extraneous stress and effort.
Relevant legislation: Bankruptcy Act 1966 (Cth)
Debt recovery proceedings can be complex and risk riddled. Through our professional services we can help this process go smoothly, mitigating stress and difficulty. We can advise on the legal parameters debt collectors must act within and we can ensure your rights and interests are protected as well as your financial assets.
The first legal port of call for debt recovery is a letter of demand. We can draft a succinct and assertive letter of demand that will hopefully preclude the need for subsequent action, therefore minimising costs. If, however, this letter of demand is not met with compliance, we can go through other legal avenues such as a statutory demand, statement of claim or wind up proceedings to achieve the best possible outcome.
HOW WE CAN HELP
Bankruptcy, insolvency and debt recovery are prevalent and complex issues. We can help you with these matters in any context through our professional legal assistance, involving: –
- Drafting letters of demand
- Preparing statutory demands
- Corresponding with ASIC in relation to your matter
- Assisting in wind up proceedings
- Negotiating and attending on creditors regarding your interests and the way forward
- Advising you on the legal minutiae of your situation and methods to minimise detrimental impact
- Any other legal action required to protect your capital interests, including litigation and dispute resolution