We Can Help

At Cor Cordis, we have handled a significant number of bankruptcy matters, ranging from relatively simple informal arrangements with creditors, to multi-million dollar bankrupt estates stretching across Australia, and almost everything in between. From this knowledge and experience, we understand how personal insolvency impacts the lives of not only the individuals involved, but also their friends and families.

We are committed to making the process as smooth as possible by providing transparent and professional solutions and support that will reduce the stress and hardship. This approach will seek to adopt a commercial outcome for the parties who are financially invested in you affairs.

If you are looking for a debtor or creditor appointed bankruptcy support, Cor Cordis can provide you with the guidance and experience you need to reach the results suited to your situation.

What is Personal Insolvency?

Personal insolvency is the inability of an individual to pay their debts as and when they fall due.

Scenarios like Debt Agreements, Debtors Petition and, Personal Insolvency Arrangements are all scenarios where individuals recognise that they are insolvent (that is, they cannot pay their debts as and when they fall due) and have taken steps to correct that position. In some cases a creditor may seek to deal with an individual’s insolvency by requesting the court to bankrupt the estate where the individual fails to do so themselves.

As detailed in the sections below, there are many indicators that individuals should look at to see if they are insolvent, as well as indicators for creditors that individuals that owe them money may be showing signs of financial hardship.

Signs of Trouble – Indicators

From our experience, when parties realise that they cannot make repayments on their obligations (whether credit card bills, water rates, vehicle finance payments etc), the first reaction is to ignore the issue hoping it eventually goes away. However, the sad reality is that this type of approach only serves to limit the options available and usually results in a forced bankruptcy through the Court (by way of a Sequestration Order).

Cor Cordis firmly believes that this type of approach, and the eventual results, can generally be overcome by a pro-active approach, where bankruptcy is seen as a first option not the last resort.

One of the questions we get asked, usually after the fact, was “How was I to know I was in that much trouble?”. Below is a list of some of the indicators we usually see that signal that a party may be struggling:

  • High degree of discretionary spending (i.e. spending on luxury items);
  • Poor relationship with the bank and a lack of borrowing capacity;
  • Borrowing money from friends and family to meet expenses;
  • Dishonoured cheques;
  • Credit cards at, or in excess of available funding;
  • Special arrangements with select creditors;
  • Demands, summonses, judgements, writs or warrants being issued;
  • Payments to creditors of round amounts;
  • Inability to quantify your asset and liability position (usually due to a lack of relevant records); and
  • Creditors applying pressure for payment.

From our experience, the most common indicators of personal financial insolvency are a combination of high degrees of discretionary spending, combined with credit facilities (such as credit cards) at, or in excess, of their credit limits.

Signs of Trouble – Acts of Bankruptcy

An act of bankruptcy is an action or event that a creditor can use to make an application to the court to bankrupt a person. An act of bankruptcy must occur prior to the Court issuing a sequestration order (a bankruptcy order) on a person.

Section 40 of the Bankruptcy Act  sets out an exhaustive list of ‘acts of bankruptcy’, with some of the more common acts as follows:

  • An enforcement notice has been issued against a debtor by the Court;
  • A debtor sells, transfers or otherwise disposes of property for the intention of defeating creditors;
  • A debtor executed a controlling trustee authority under Section 188 of the Bankruptcy Act;
  • A debtor leaves the country or begins to “keep house” (avoid creditors); or
  • A debtor fails to comply with a Bankruptcy Notice issued by the Official Receiver, Australian Financial Security Authority (“AFSA”) (formerly known as the Insolvency and Trustee Service Australia).

The most common act of bankruptcy we generally encounter is the failure to comply with a Bankruptcy Notice. A Bankruptcy Notice is essentially a formal notice of demand for payment by a creditor and (generally) allows the debtor twenty-one (21) days to either contest or pay the amount outstanding.

Options Available

If by reading the above you feel like your situation is showing signs that you may be struggling, it may be time to seek professional advice and address the issues now, rather than dealing with the consequences later.

For a personalised service, contact Cor Cordis to arrange an obligation free meeting to discuss your circumstances and whether a formal or informal insolvency arrangement may be beneficial to your circumstances.