Auckland Bankruptcy Lawyer – What Happens To An Individual
Bankruptcy: Responsibilities and Restrictions
When a person declares or is declared bankrupt, they have certain obligations and responsibilities. There are also some limitations on what they can and cannot do. Below we look at some of those issues.
Auckland Bankruptcy Lawyer – Guide To Limitations
A bankrupt’s property passes to the Official Assignee (OA) once he or she declares bankruptcy. Family trust assets may be regarded as property. Similarly, a fifty percent share in property like a house jointly owned with a spouse, may be claimed to.
The OA can also include claim any income earned during the period of the bankruptcy and it may be distributed to creditors.
In most bankruptcies, however, if the income is minimal, the OA will take no action because bankrupts have a right to keep earnings that are required to support themselves, their spouse, and their family.
There are substantial penalties if a solo proprietor goes bankrupt. The OA may decide to close the business and sell any assets to pay lenders and people owned money.
Additional limitations in bankruptcy include:
- Not being able to be a director of a company,
- Must not impede the Official Assignee in their role with the bankrupt’s case,
- Should keep the OA informed of any changes to their name, address, or income,
- Obliged to make a creditor aware of their state if seeking a loan of more than $1000,
- Overseas travel is forbidden without the approval of the OA,
- Are not able to be employed in certain industries,
- Cannot be involved in a business owned or managed by a relative.
Alternatives to Bankruptcy
There are a few options to declaring bankruptcy.
A Debt Repayment Order (formerly Summary Instalment Order) is an option for a debtor who does not have the financial resources to repay debts right away. However, they can demonstrate that they can make regular payments. From their current budget.
The debtor’s application is made to the Official Assignee. If successful in the application, the debtor is permitted to repay debts over a period of time and to The debtor submits an application to the Official Assignee. If the application is approved, the debtor is given the opportunity to settle arrears and loans over an agreed timeframe. This is a very quick and simple approach which can be quite beneficial to a debtor. The order reduces any pressure from creditors, it does and does have the high fees associated with bankruptcy, and the debtor does not have the same stigma as a bankrupt.
The No Asset Procedure is an alternative to bankruptcy for debtors who are unable to repay their debts and believe there is no chance of this changing. It is a one-time chance to settle the debtor’s financial difficulties without filing for bankruptcy.
Summing Up
Debts may seem overwhelming, and people may not see a way out. A knee-jerk response is to see bankruptcy. However, while this is a solution to short-term debt, this has long-term implications. The bankrupts credit record is ruined and can take years to repair. Getting a loan such as a mortgage becomes very difficult.
The restrictions in work opportunities might be difficult for some people, especially if they have been self-employed and then have to work for an employer. They lose many of the freedoms they have been used to.
If you face large debts which are difficult to manage, talk to an Auckland bankruptcy lawyer before you take any firm steps. They will be able to help you with the options available to you and help you through the various steps.
McVeagh Fleming in central Auckland has extensive experience helping people in such circumstances. You can find more information here.