|October 1, 2017||Comments Closed|
If you have been given a bankruptcy notice or court order you must act quickly to avoid future distress. Owing somebody money referred to here as a creditor, can be any person or company to whom you owe money. If you’re unfit to pay money to a creditor, the creditor will get in touch with the Australian Financial Security Authority (AFSA) who will consequently send a bankruptcy notice demanding payment of that money.
Naturally, there is a limit to the level of money owing to creditors before they can speak to the AFSA, and the minimum amount is $5,000. Immediately after the creditor has secured a final judgment, AFSA will issue you with a bankruptcy notice.
It’s very important that you take prompt action if you receive a bankruptcy notice from the AFSA. You will commit an ‘act of bankruptcy’ if you fail to do any of the following:
Committing an act of bankruptcy suggests that you give your creditor the permission to apply to the Federal Circuit Court for a sequestration order, or in other words, 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 variety of ways; it can be validly served to you personally, by ordinary post, or hand delivered to your registered address. In some circumstances, a bankruptcy notice may be served in a digital format, either by means of fax or email.
If it’s not conceivable for a creditor to serve a bankruptcy notice using any of these methods, a court order can be obtained which enables creditors to serve the bankruptcy notice in a separate way.
I have a bankruptcy notice, now what?
To comply with a bankruptcy notice, you must do one of three things:
It is necessary to note that all of these actions must be taken within the timeframe specified in the bankruptcy notice (usually 21 days from the date of the notice).
Can I get my Bankruptcy Set Aside?
If warranted, you can apply to the court to have the bankruptcy notice set aside or cancelled. This must never be taken lightly however, considering that if there are inadequate grounds to make an application then you will be obligated to pay all the creditors legal costs which only increases the debt you owe to them.
If you do apply for your bankruptcy notice to be set aside, it’s always a clever idea to request that the court prolongs the timeframe for compliance with the bankruptcy notice, so you stay clear of committing an act of bankruptcy while the court processes your application. Simply put, 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 a genuine argument to do so. You must have already submitted the relevant documents with the court that handed down the order. Furthermore, you must be able to present evidence to the Federal Circuit Court that reveals that you have a genuine case for grounds of appeal.
Additionally, if you do not initiate the process of setting aside the judgement or order prior to filing your application to set aside the bankruptcy notice, the Federal Circuit Court will not have the ability to lengthen the timeframe for compliance under sections 41( 6A) and 41( 6C) of the Act. Subsequently, 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 follow the requirements of the Act, in which case you may have grounds to request 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 speaking, the defect must be serious or cause confusion over the actions you must take to adhere to the bankruptcy notice for you to have the capacity to set aside the bankruptcy notice.
There are some necessary requirements of a bankruptcy notice and if these requirements aren’t met, the bankruptcy notice will subsequently be invalid. The following provides some examples where these necessary requirements have not been met:
The following details some circumstances where bankruptcy notice defects have not been considerable enough to make them invalid:
There are several other legal requirements that should be noted. 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 have to successfully demonstrate to the court the following two items:
What is an Abuse of process?
An abuse of process transpires if you can substantiate that the reasons behind the bankruptcy notice is to pressure you to pay a debt, rather than a genuine 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 because of an abuse of process. To be successful using these grounds, you will need to supply evidence of collateral purpose or inappropriate pressure.
What If I feel that I have grounds to act on one of these items above?
If you feel you have a case for one of the abovementioned reasons to challenge your bankruptcy, you will need to get the following documents prepared, filed, and served in order to apply for your bankruptcy notice to be set aside:.
You can find the requirements for an application to set aside a bankruptcy notice in rule 3.02 of the Rules. You can either request a final order or an interim order.
Final orders need to specify the ideal outcome you aspire to receive and the legislative basis which the court can approve this decision. An example of a final order can 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 provide a copy of the bankruptcy notice with your application.
However, an interim order has to illustrate any outcomes you wish before the application is finally decided upon, and the legislative basis which the court can grant this decision. An example of an interim order may be: “The time for compliance with bankruptcy notice (BN00233) be prolonged 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 intend to make an application, it must be accompanied by an affidavit which describes the grounds of your application along with 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 vital that your affidavit must follow rule 3.02 of the Rules, or else your application may be refused and your request for an extension of time to adhere to the bankruptcy notice may not be granted.
Filing your application.
After your documents are completed, they will need to be filed with the courts either online or personally at the Federal Circuit Court Registry.
There is a lodging fee 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 three days after the documents have been filed.
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 decide not to receive the documents, the individual serving them may put the document in the presence of the individual to be served and verbally inform the person what the documents consist of.
If you are a company, you must personally visit a registered office of the organisation and give the documents to a person servicing that organisation. You don’t have to give the documents to the organisations principal business, the Australian Securities and Investment Commission (ASIC) will provide you with a list of that company’s registered addresses.
If you would prefer another person 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 sure whether you have grounds to set aside the bankruptcy notice, or you’re uncertain whether you should spend the time and money to apply as a result of financial reasons, get in touch with Bankruptcy Experts Mount Isa on 1300 795 575 for free advice. As an alternative, you can visit our website for additional details: www.bankruptcyexpertsmountisa.com.au