Bankruptcy Rights

Once you file for bankruptcy, your situation will change overnight.

What bankruptcy will do

  • You need to stop all further business dealings.
  • bankruptcy will stop any action the creditors may take against you.
  • bankruptcy will stop any foreclosure action the creditors may be taking against your home or against your assets.
  • The bankruptcy will prevent the repossession of your vehicles or other property on which money is owed.
  • The bankruptcy will prevent debt collection people harassing you.
  • The bankruptcy will allow the claims of all creditors to be detailed and assessed as to their merit and then an arrangement made for payment.
  • The bankruptcy will at the end discharge you from all liabilities for debts you owe to others.
  • The bankruptcy will enable you, after a period, to start afresh.

What bankruptcy won't do
While bankruptcy will take away a lot of stresses and heartaches you have regarding your financial problems, it is not a medicine to cure all the ills you may have.

Some things your bankruptcy will not do for you include the following:

  • It will not discharge you from some responsibilities such as payment of child maintenance and alimony.
  • It will not discharge the right of your creditors to take over and cash in the assets over which they have security.
  • It will not discharge you for debts you incur after the bankruptcy petition has been filed.
  • It will not protect you from creditors calling up personal guarantees you may have given and members of your family may have given to secure loans, etc.
  • In reality it may not stop the harassment from some creditors who you owe money to.
  • It will not clear your good name and record quickly, because once you are bankrupt, it will stay on your credit rating and credit details for 5 years.

What about your Debts?
From the date of your bankruptcy adjudication, the Official Assignee becomes responsible for most of your debts. Your creditors will submit claims in your bankruptcy for the amount they say is owing to them. Only those debts known as provable debts will feature in the bankruptcy and will be paid out, as funds are available.

These debts are frozen from the date of bankruptcy and they can no longer be pursued against you or any penalties added to the amounts owing.

Once you are discharged from bankruptcy you are released from all your provable debts and your creditors can no longer pursue you for those old debts. You will still be responsible for the payment of reparation or for fines imposed by the courts, or for child support and maintenance commitments.

Any advances and overpayments you receive from Work and Income the USA, as well as any debts incurred after the date of your bankruptcy do not form part of your bankruptcy assets.

If any creditors begin to pursue you, you should write the name and phone number of your insolvency officer on the bill, and mail it back to the creditor. If you are continually hassled by the creditor for payment, pass the matter over to your insolvency officer to deal with.