QLD Received a Letter Advising Bankruptcy - What to Do?

[pat]

I have been sent a letter by a legal firm stating there client has instructed them to force me into bankruptcy and that there would be no further correspondence. I sent them a message asking if Ithis can be avoided if I were to bring payments up to date. I have not received a reply after 3 days.

The debt was is in the amount of $30,000 as a result of a lost court decision over a vehicle accident. On the day of judgment, my barrister advised them that I could afford to pay weekly instalments of $30.

Their soliciters later demanded access to my bank statements and then pushed me into and agreement of $220 per month. I told them that as I am self-employed, it would be much more likely that I maintain payments if it was a weekly debit. I also again told them that the most I could afford was $30. Finally, after much pressure, I agreed to try to make payments of $220 per month.

Can you help me with what steps I should now take?

 

[Sophea]

Hi pat,

Do you have evidence that they agreed to a $220 per week payment plan? Did you stick to the payment plan? Or did you default?

Have they served you with a bankruptcy notice yet? Have they served you with a creditor's petition?

Generally, if a judgement debt is not paid, the next step is to issue a bankruptcy notice against you. Failure to pay this in full by the date on the bankruptcy notice amounts (prima facie) to an act of bankruptcy - which demonstrates that you are legally insolvent (i.e. unable to pay your debts as and when they fall due).

A creditor's petition can then be filed which is essentially an application to bankrupt you - relying on your failure to pay the bankruptcy notice as the act of bankruptcy. You can still avoid being made bankrupt if you can pay the debt and prove that you can pay your debts.

 

[pat]

Hi. Thank you for your help.

Yes I have written agreement to pay $220 a month. As I am self-employed, I have missed or been slow on some payments. The agreement was that if I went over a month behind, they could take action.

I am two payments behind. I messaged them to ask if I paid up to date would they cease the forced bankruptcy, but they have not replied. What should I do?

 

[pat]

There is a written agreement that I pay 220 per month and that if it is over a month late, they can take action. They sent me a letter advising that their client has instructed them to commence bankruptcy proceedings against me and that they were not required to provide any further correspondence.

I would like to re-negotiate the debt so that I pay $30 per week. Is That possible? Also, is the letter merely a threat designed to prompt me to catch up payments or is it there next course of action?

 

[Sophea]

I doubt that the letter is merely a threat, as they have obviously given you ample opportunity to pay off the debt. There was a written agreement for a payment plan - which they were not required to offer to you and you breached it. Therefore they are well within their rights to file for your bankruptcy. It is not your 'right' to pay off a judgement debt at $30 per week.

 

[pat]

Why would they force bankruptcy when I have no assets? My work ute is worth what I owe on it around $10,000. My private transport is a motorbike worth about 2000 and I have no assets other to liquidate.
Also, would it be better for me if I declared bankruptcy myself?

 

[Sophea]

Hi Pat,

They only have your word on that. I assume they have not undertaken examinations of your financial affairs to determine whether you are pecunious or not so they will most likely proceed if they believe there is a prospect of recovering some of the debt. Even if you have no assets, you will be bankrupt for a period of several years during which time your trustee will collect part of your wages to repay your debtors.

No substantive difference if they bankrupt you or you bankrupt yourself.