Bankruptcy on a creditor’s petition always involves a Court hearing.

In order for the judge/court to make a bankruptcy order, it must be satisfied that the debt is proven and that either:

  • The debtor can’t repay the debt, or
  • In the case when payment is not yet due, that the debtor has no realistic chance of being able to repay the debt when it is due.

If you have already repaid the debt in full, then the case will be dismissed, but you may still have to pay the creditors costs if this repayment was after the presentation of the petition.

Reasons A Bankruptcy Order May Not Be Made

  • If, in the Court’s opinion, the creditor has refused to accept reasonable payment by installment or a reasonable reduced full and final payment to settle the debt.
  • An agreement is reached at the hearing for the repayment of the debt.

When the bankruptcy order is made, there are normally 4 elements to it:

  • A bankruptcy period of 12 months.
  • Lump sums to be raised by the sale of assets, for example home or car (see Your Assets & Bankruptcy for details).
  • Monthly contributions from income (see Payment from income during Bankruptcy for details).
  • Claims to property you ‘acquire’ (eg inherit) after the date of the bankruptcy order and before discharge from bankruptcy.