What is Bankruptcy Annulment?
If you have declared bankruptcy and you want to get out of bankruptcy earlier than the usual period of 3 years, you have 2 options.
An annulment can be achieved in several ways:
- You pay out all of your debts in full (including the fees and charges owing to your trustee); or
- You submit a proposal to your trustee under Section 73 of the Bankruptcy Act and offer your creditors an amount of money which is less than what they are owed in full and final settlement.
Option 1 – full annulment
With a full annulment you will be released from bankruptcy immediately and this will be better for your credit record because you will be able to demonstrate that you have paid out all of your debts in full.
Option 2 – Section 73 proposal
With a Section 73 proposal, a successful proposal will be subject to creditor approval. 75% of your creditors (measured by the value of what they are owed) and 50% in number of your creditors must agree to the proposal. Given the high voting requirement it can sometimes be challenging to implement.
Once your annulment has been achieved your trustee in bankruptcy will pay out your creditors and finalise the bankruptcy administration. It may still show up on your credit record, but at least you will be able to demonstrate that you proactively dealt with your bankruptcy and concluded it early.
For more information regarding bankruptcy annulments and if this is an option for your financial situation, contact Australian Insolvency Services on 1800 210 073.