After receiving a bankruptcy notice, you usually have 21 days to either comply or apply to have it cancelled. However, amid the COVID-19 crisis, the time for compliance has been extended to 6 months. If you don’t do anything within that time frame, you may be committing an “act of bankruptcy”. It’s a good idea to learn about your options and act early.
This resource is written for people who have received a bankruptcy notice and contains information about:
The threshold amount of $20,000 to issue a bankruptcy notice, and the 6 month period to respond, will be in force for 6 months,
from 25 March 2020. From 25 September 2020, the threshold amount to issue a bankruptcy notice will decrease to $5,000 and the time to respond will be 21 days.
A bankruptcy notice is a demand for payment of money by a creditor from a debtor. A creditor is someone who is owed money. A debtor is someone who owes money.
A bankruptcy notice is usually issued because a creditor has obtained a court judgment or judgments worth $20,000 or more against a debtor.
After receiving a bankruptcy notice, you will commit an “act of bankruptcy” if you:
If you commit an act of bankruptcy, you give the creditor grounds to lodge a creditor’s petition to apply for a court order that you be made bankrupt (this is called a sequestration order).
A bankruptcy notice can be given to you by being:
When a bankruptcy notice is given to you like this, it has been “served”. If the creditor can’t serve the bankruptcy notice in any of these ways, the Court may order that the bankruptcy notice be served in another way. For example, the Court may order that the bankruptcy notice be given to another person who will let you know about the bankruptcy notice
There are two ways to comply with a bankruptcy notice:
You may apply to the court to challenge a bankruptcy notice before the time for compliance with the notice has finished. If you do this, you should also request that the court extend the time for compliance with the bankruptcy notice so that you don’t commit an act of bankruptcy while waiting for your court hearing to cancel the notice.
You can apply to challenge a bankruptcy notice by arguing that:
Defects in the bankruptcy notice are to do with requirements under the Bankruptcy Act 1966 (Cth) not being met.
The following are grounds upon which a court may cancel a bankruptcy notice:
The following problems with a bankruptcy notice have been found not to cause a notice to be in invalid:
To prove that the debt in a bankruptcy notice does not exist, you need evidence that:
There are two things you will need to satisfy the Court of to succeed under this ground:
You should file a Notice of Opposition and supporting affidavit that details why you are opposing the creditor’s petition.
To apply to set aside the bankruptcy notice you will need to take the following steps:
All forms and further information can be obtained from the Federal Circuit Court’s website at this link:
You can also file documents electronically via the Commonwealth Courts Portal by visiting this link:
You should allow at least one (1) business day for your account to be approved.
An example of the orders to be sought in the application are as follows:
Get a copy of the application and affidavit in support stamped by the court.
Similar to Part 2 (Service of a Bankruptcy Notice) above, service can be by a number of ways, including by post or in person. If service is to be performed personally, the following steps apply:
This resource was published 21/09/2017. This is legal information only and does not constitute legal advice. You should always contact a lawyer for advice specific to your situation.