Can I get out of bankruptcy early?
By Administrator 30 May, 2018
We know that bankruptcy is not going to be your first choice, but it is important to know that if your circumstances change, you may be able to end your bankruptcy early. We explore the different ways in which you may be able to end your bankruptcy early.
- A Formal Proposal
The Bankruptcy Act envisages that people may want to end their bankruptcy early and Section 73 of the Act sets out the procedures to follow if you wish to put a proposal to your creditors to end your bankruptcy early. First of all, you need to offer your creditors more than what they would receive if your bankruptcy continued for the usual period of time. So you will need to understand what assets your Trustee in Bankruptcy will realise during your bankruptcy and offer more than this amount. This will provide your creditors with an incentive to accept your proposal rather than allowing your bankruptcy to continue for the usual period. Once you have worked this out, you will need to put your proposal in writing to your Bankruptcy Trustee with details of how your proposal will be funded (because you can’t use your own funds as they would have already vested with your trustee). Your Bankruptcy Trustee will then prepare a report to your creditors and include a recommendation. In order for your proposal to be accepted you will need to receive enough positive votes to pass the voting threshold. The voting threshold is 75% of the value of all debts and more than 50% of the number of your creditors. This vote will be dealt with by your Bankruptcy Trustee at a meeting of creditors. If you receive enough votes your bankruptcy will come to an end with immediate effect. This can be a very cost effective way of bringing your bankruptcy to an end early.
- A Court Application
You may be eligible to apply to court for your bankruptcy to be annulled. You will need to first obtain legal advice as to whether you have grounds for such an application.
- Payment of your debts in full
This option may be attractive if you win the lottery or you inherit enough money to pay your debts in full, including all costs and expenses your Trustee in Bankruptcy has incurred. Alternatively a family member or close friend may provide the required funds.
If you’re thinking about bankruptcy, it’s important to be well informed of all of your options including bringing your bankruptcy to an end early. At Debt Free Australia we have an in-house Bankruptcy Trustee who can advise you on all available options. If you want to explore bankruptcy further please call our friendly and professional debt consultants on 1800 676 598.