If you have acquired a bankruptcy notice or court order you must act rather quickly to avoid future distress. Owing anyone money known here as a creditor, may be any individual or organisation to whom you owe money. If you’re unable to pay money to a creditor, the creditor will speak to the Australian Financial Security Authority (AFSA) who will subsequently dispense a bankruptcy notice requesting payment of that money.
As to be expected, there is a threshold to the volume of money owing to creditors before they can get in touch with the AFSA, and the minimum amount is $5,000. Once the creditor has secured a final judgment, AFSA will issue you with a bankruptcy notice.
It’s integral that you take timely action if you receive a bankruptcy notice from the AFSA. You will commit an ‘act of bankruptcy’ if you do not do any of the following:
Committing an act of bankruptcy indicates that you give your creditor the authorisation to apply to the Federal Circuit Court for a sequestration order, or simply put, an order that will make you lawfully bankrupt.
How does a Bankruptcy Notice get served to me?
A bankruptcy notice can be served to you in a couple of ways; it can be validly served to you in person, by regular post, or hand delivered to your registered address. In specific scenarios, a bankruptcy notice may be served in an electronic form, either by means of email or fax.
If it’s not feasible for a creditor to serve a bankruptcy notice using any of the above methods, a court order may be acquired which permits creditors to serve the bankruptcy notice in a separate way.
I have a bankruptcy notice, now what?
To adhere to a bankruptcy notice, you must do one of three things:
It is necessary to note that all of these actions must be taken inside the timeframe detailed in the bankruptcy notice (usually 21 days from the date of the notice).
Can I get my Bankruptcy Set Aside?
If justified, you can apply to the court to have the bankruptcy notice set aside or cancelled. This mustn’t be taken lightly though, since if there are unsatisfactory grounds to make an application then you will be obligated to pay all the creditors legal expenses which only bloats the debt you owe to them.
If you do apply for your bankruptcy notice to be set aside, it’s always a wise idea to request that the court extends the timeframe for compliance with the bankruptcy notice, so you stay clear of committing an act of bankruptcy while the court processes your application. In short, don’t leave it to the eleventh hour.
To have your bankruptcy notice set aside, one of the following conditions must apply:
What if the debt claimed on the bankruptcy notice does not exist?
To substantiate that the debt claimed on your bankruptcy notice does not exist, you will need to supply evidence that:
In your application to set aside the bankruptcy notice, you can not simply say that you have an authentic argument to do so. You must have already filed the applicable documents with the court that handed down the order. Moreover, you must be able to provide evidence to the Federal Circuit Court that illustrates that you have an authentic case for grounds of appeal.
Likewise, if you do not start the process of setting aside the judgement or order before filing your application to set aside the bankruptcy notice, the Federal Circuit Court will not be able to increase the timeframe for compliance under sections 41( 6A) and 41( 6C) of the Act. Consequently, you will have committed an act of bankruptcy.
What is a Defective Bankruptcy Notice?
A defect in the form or content of the bankruptcy notice occurs when the creditor has failed to obey the requirements of the Act, in which case you might have grounds to make an application for the bankruptcy notice to be set aside. Some defects are more severe than others, and not all defects will make a bankruptcy notice invalid as these defects can be remedied at the discretion of the court under s 306( 1) of the Act.
Generally, the defect must be considerable or cause confusion over the actions you must take to satisfy the bankruptcy notice for you to have the opportunity to set aside the bankruptcy notice.
There are some crucial requirements of a bankruptcy notice and if these requirements aren’t met, the bankruptcy notice will consequently be void. The following details some examples where these essential requirements have not been met:
The following details some cases where bankruptcy notice defects have not been serious enough to make them invalid:
There are several other legal requirements that should be kept in mind. These include:
Under what grounds could I counter-claim, set-off or cross demand?
To be successful using the grounds of counter-claim, set-off or cross demand, you will need to successfully demonstrate to the court the following two items:
What is an Abuse of process?
An abuse of process results if you can prove that the reasons behind the bankruptcy notice is to pressure you to pay a debt, instead of an honest effort by the creditor to invoke the court’s jurisdiction in regard to bankruptcy. If the former is true, then you will have the potential to set aside the bankruptcy notice due to an abuse of process. To succeed using these grounds, you will need to provide evidence of collateral purpose or unnecessary pressure.
What If I think I have grounds to act on one of these items above?
If you find that you have a case for one of the previously mentioned reasons to rebut your bankruptcy, you will need to get the following documents prepared, filed, and served so as to apply for your bankruptcy notice to be set aside:
You can locate the requirements for an application to set aside a bankruptcy notice in rule 3.02 of the Rules. You can either secure a final order or an interim order.
Final orders have to outline the ideal result you wish to receive and the legislative basis which the court can approve this decision. An example of a final order may be: “That bankruptcy notice (BN00231) issued on 15 June 2017, which was served to me on 1 July 2017, be set aside under section 30( 1) of the Bankruptcy Act 1966.” You would also need to supply a copy of the bankruptcy notice with your application.
However, an interim order should summarise any outcomes you wish before the application is finally decided upon, and the legislative basis which the court can approve this decision. An example of an interim order might be: “The time for compliance with bankruptcy notice (BN00233) be extended up to and including 7 days after the outcome of this application by the Court under section 41( 6A) of the Bankruptcy Act 1966.”.
If you wish to make an application, it must be accompanied by an affidavit which describes the grounds of your application as well as the date the bankruptcy notice was served to you. If you’ve already made an application to set aside the judgement of the bankruptcy notice, a copy of this application/s also needs to be attached. It’s paramount that your affidavit must follow rule 3.02 of the Rules, or else your application may be rejected and your request for an extension of time to satisfy the bankruptcy notice may not be approved.
Filing your application.
When your documents are finalised, they will need to be filed with the courts either online or personally at the Federal Circuit Court Registry.
There is a lodging charge that will need to be paid, however in various scenarios you can apply for a waiver of this fee.
Serving your documents.
Once you’ve filed your application and affidavit and they have been stamped, you must personally serve these documents to the creditor within 3 days after the documents have been submitted.
If you are an individual, you must personally take the documents to the person identified on the document and hand it to them. If they choose not to take the documents, the individual serving them may put the document in the presence of the individual to be served and verbally inform the individual what the documents consist of.
If you are an organisation, you must personally go to a registered office of the business and hand over the documents to an individual servicing that company. You don’t have to deliver the documents to the organisations principal business, the Australian Securities and Investment Commission (ASIC) will provide you with a list of that businesses registered addresses.
If you prefer someone else to serve the documents, you can get a bailiff of the court or a process server to serve the documents for a cost.
If you’re not satisfied whether you have grounds to set aside the bankruptcy notice, or you’re hesitant whether you should devote the time and money to apply because of financial reasons, talk with Bankruptcy Experts Penrith on 1300 795 575 for free advice. Alternatively, you can visit our website for more information: www.bankruptcyexpertspenrith.com.au