Bankruptcy is a legal process where control of your assets and finances are handed over to a trustee if you cannot pay your debt. You may either voluntarily declare bankruptcy or be involuntarily made bankrupt through a creditor’s action. Once you are declared bankrupt, whether voluntarily or involuntarily, you cannot go back.
Bankruptcy tends to last for 3 years and 1 day from the date you file for it. However, once this time has elapsed, landlords, employers, and lenders will be able to determine if a person was ever bankrupt by looking at the National Personal Insolvency Index (NPII). Information about your bankruptcy is permanently available on this public register. This means that you may find it difficult to obtain any loans or mortgages, or be approved to rent a property in the future.
Consequently, it is highly recommended that you seek advice from bankruptcy lawyer who can advise you on different ways of repaying your debts without involving a declaration of bankruptcy.
Voluntary vs. Involuntary
Voluntary bankruptcy refers to the situation where you decide to lodge a petition to become bankrupt on your own accord.
On the other hand, involuntary bankruptcy refers to the situation when an agreement cannot be reached to pay outstanding debts and the creditor lodges an application with the court to declare you bankrupt.
Bankruptcy is a legal status that an individual (including small businesses) can attain under the Bankruptcy Act 1966 (Cth), where once they have declared bankruptcy:
- Creditors can no longer pursue further payment (with some exceptions);
- Certain restrictions are placed upon them;
- Their property is made available, through a trustee, for distribution among creditors.
However, when a company is unable to repay its debts, that is technically called ‘liquidation’. Despite the terms ‘bankruptcy’ and ‘liquidation’ often being used interchangeably by the lay person, they have significant differences in the eyes of the law.
Liquidation is principally governed under the Corporations Act 2001 (Cth). Therefore, if your business actually falls within the definition of a ‘company’, you may want to hire a lawyer who can help you understand the liquidation process and its alternatives under Corporations Act.
What Is A Bankruptcy Lawyer?
A bankruptcy lawyer represents either the creditor or debtor in bankruptcy proceedings. They aim to minimise or eliminate debt or assist in the commencement of bankruptcy proceedings. Bankruptcy lawyers representing a debtor will strive to reduce their debt load and repayments to creditors. A bankruptcy lawyer may also support creditors, ensuring that as much money owed from the debtor is obtained.
Our lawyer network includes a wide range of bankruptcy lawyers who can assist you.
Why Do I Need A Bankruptcy Lawyer?
A bankruptcy lawyer is useful in situations where you owe money or where money is owed to you. A debtor may voluntarily initiate proceedings by issuing a debtor’s petition. A bankruptcy lawyer can assist in the proceedings of a debtor’s petition and help you to work out the next steps. A bankruptcy lawyer is also useful where creditors issue a creditor’s petition to claim their debts. When a creditor’s petition has been issued bankruptcy lawyers can be utilised by both parties.
What Will A Bankruptcy Lawyer Provide?
A bankruptcy lawyer will be able to provide extensive guidance to both creditors and debtors in bankruptcy proceedings. They have the necessary experience which can help you to maximise the best outcome for yourself as a debtor or creditor and overcome any legal issues which can arise throughout the process.
How Much Will A Bankruptcy Lawyer Charge?
Legal costs can be unpredictable and expensive which is a burden for both debtors or creditors in bankruptcy proceedings. Our aim at LawPath is to provide you with legal options that are fast, affordable and tailored to your bankruptcy needs. We’ll connect you with an experienced bankruptcy lawyer that is best suited to your individual needs. This allows you to choose the solution which is best tailored to your situation.
Hourly rates and Court fees
The cost of a Bankruptcy will vary based on the scope of the work. Small issues likely to be addressed quickly will cost less. For matters that will need to go to the relevant Court or Tribunal, there may be additional fees involved, particularly as this work takes time. These types of matters may also involve obtaining documents and negotiating with the other party.
What can a Bankruptcy Lawyer legally charge?
Costs can rise very quickly in litigation. However, this is sometimes hard to avoid when work is being done by a lawyer on an hourly basis. Where fixed-fees are not offered by the lawyer, you should expect to be invoiced on a monthly basis. Lawyers are required to adhere to the rules outlined in the relevant acts. For example, in NSW and Victoria, this is the Legal Profession Uniform Law 2014.
Lawyers are required to provide to their clients a document called a ‘costs disclosure’ if your costs will be higher than $750.00. This document will outline how costs will be calculated in relation to your case. Also be mindful that costs are divided into ‘professional costs’ and ‘disbursements’, and you will be expected to pay for both. Professional costs are the costs of the actual work done by the lawyer, whilst disbursements cover incidentals such as court filing fees, telephone calls, photocopying charges – amongst other things.
What if I don’t agree with the costs?
You have the right to request an itemised bill that will outline how much time was spent on each task in relation to your matter, and how this adds up to the fee you’re requested to pay. If you wish to dispute the cost, you can make a complaint to the The Office of the Legal Services Commissioner (OLSC) and they will investigate the matter and may allocate a costs assessor. You can also take further legal action in the Courts if you feel you have been unfairly charged.