If you have an outstanding debt that has not been paid, there is a possibility that you may be served with a bankruptcy notice by the person or organisation to whom you owe money to. A bankruptcy notice is a formal demand for payment of outstanding monies to a creditor and are served to enforce a court judgment worth $5,000.00 or more.
Upon being issued with a bankruptcy notice, there are essentially four options you may take to deal with the notice:
1. Attend to payment of the amount owed
If the bankruptcy notice was issued to you before 25 March 2020, you have 21 days to attend to payment of the amount owed. Due to the circumstances surrounding the coronavirus pandemic, where a bankruptcy notice was issued on or after 25 March 2020, you have 6 months to pay the amount owed, from the day the notice was received.
If you do not make payment of the amount owed, the relevant creditor may seek to make you bankrupt by way of a court order. This is known as a sequestration order.
2. Arrange an alternative agreement with your creditor
As per the previously mentioned timeframes, you will have 21 days to reach an alternative agreement with your creditor for a bankruptcy notice that was issued to you before 25 March 2020. For bankruptcy notices that were issued on or after 25 March 2020, you will have 6 months to reach an agreement with your creditor.
You may seek to contact your creditor to discuss the notice, invoices for the debts and payment options such as payment instalments or other mutually agreed payment plans.
3. Make an application to the court
Another option is to make an application to the court to set aside the judgment or court order that led to the bankruptcy notice being issued. You may also make an application to set aside the bankruptcy notice.
4. Take no action
If you do not take any action such as making payment of the debt or entering into an alternative arrangement with your creditor, this will be considered an ‘act of bankruptcy’ and your creditors may use this to make you bankrupt via a court order.
Chamberlains Law Firm are experts in the field of bankruptcy and insolvency. If you or someone you know has been issued with a bankruptcy notice, please contact Chamberlains Law Firm for a free initial consultation