How Does Bankruptcy Commence?

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A bankruptcy can commence either through a Debtors Petition (being initiated by the person in debt) or a Creditors Petition (initiated by the creditor/s).

A debtor’s petition is when a person in severe debt with a dire financial situation would come to a conclusion that the best possible solution for their situation would be to proceed with bankruptcy in order to satisfy their debts. The debtor will also lodge a Statement Of Affairs which by law has to contain all secured and unsecured creditors, all assets and resources floating and fixed, and a complete and comprehensive listing of all relative information regarding their personal affairs.

A creditor’s petition is where a creditor has obtained a judgement on their debt and has subsequently served a “Bankruptcy Notice” upon the debtor. The Bankruptcy Notice sent through bankruptcy lawyer Brisbane will contain an expiry date on which the debtor must satisfy the debt or come to an arrangement with the creditor within that timeframe, or the creditor may file a creditor’s petition to the Federal court to obtain a sequestration order, bankrupting the debtor.

Even if the value of ones assets exceeds their debts they still may be “insolvent” if they are unable to liquidate them in order to satisfy their debts. If one has debts and is subsequently served with a bankruptcy notice and is unable to satisfy the terms, they are then bankrupt regardless of available assets or funds. Hire our bankruptcy lawyers in Brisbane for more information.

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