Debt Recovery: When an individual is declared bankrupt
At Streten Masons Lawyers we use our debt collection experience to your advantage. How? We deliver a letter of demand to the debtor which includes a period of time in which the debt is payable, which in our experience this maximises your chance of recovery. If payment is not made as requested in the letter of demand, Court proceedings can be immediately filed.
In the event of a bankruptcy…
If an individual is declared bankrupt by the Courts, a Trustee is appointed to take control of the insolvent person’s estate in order to turn the assets into cash to distribute equally among unsecured creditors (those who do not hold security for payment of the debt).
Secured creditors may commence debt recovery by disposing of the asset securing the loan (e.g. a bank would do this if mortgage payments are not made on a house). Bankruptcy proceedings are handled in either the Federal Court or the Federal Magistrates Court, depending on the complexity.
When a company is declared insolvent the Court has the power to ‘wind it up’ and appoint a Liquidator, whose responsibility is to turn the assets into cash and distribute it in the order set out in the Corporations Act.
The creditor and the liquidator firstly recover their costs, followed by certain entitlements to employees. The balance is distributed among unsecured creditors. Winding up proceedings are handled in either the Supreme Court or the Federal Court.
How we can help
If you need assistance in recovering a debt please complete our online debt recovery enquiry or contact Craig Mason at Streten Masons Lawyers.