• Partnership Disputes

    Partnership Disputes

    We have resolved hundreds of disputes between business partners and understand they are not easy.

    That’s why you need to engage a specialist in resolving these types of disputes.

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  • Trade Disputes

    Trade Disputes

    When it comes to business disputes, we have seen them all.

    We are experts at enforcing agreements and intellectual property rights to protect your business.

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  • Employee Disputes

    Employee Disputes

    We are all too aware of the damage an employee can do if they defect to a competitor with confidential information.

    We specialise in resolving disputes of this nature.

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  • Debt Recovery

    Debt Recovery

    Getting paid on time and in full is so important for every business.

    Our track record proves we know what we are doing.

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  • Business Transactions

    Business Transactions

    We are first and foremost business lawyers for business owners.

    We will give you the tools you need to take advantage of commercial opportunities whilst ensuring minimal risk.

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ENQUIRE

The Strategic Side of Bankruptcy

If you are owed money, or (even better) before you advance the money in the first place – you must understand bankruptcy. Whilst bankruptcy proceedings can be expensive, it is often the best way of forcing repayment.

Consequences of bankruptcy

The consequences of bankruptcy are severe and for this reason, bankruptcy is sought to be avoided at all costs. Some consequences extend beyond the actual period of bankruptcy, the most severe consequences include:

  1. Having a trustee in bankruptcy appointed who manages your financial affairs;
  2. If you own a house, often the trustee in bankruptcy will facilitate the sale of the house to pay back your debts;
  3. If you earn over a set amount during the period of bankruptcy, the additional income is taken by the trustee to pay back your debts;
  4. You cannot be a director of a company during the period of bankruptcy;
  5. Your name will permanently be on the National Personal Insolvency Index;
  6. It is often harder to obtain finance after being made bankrupt. This can significantly affect your ability to purchase a house in the future.

Bankruptcy generally lasts 3 years and 1 day, however, it can be extended. In our experience, the term of bankruptcy is extended where the bankrupt fails to provide documents to the trustee. Often the reluctance to provide documents is because the bankrupt is trying to conceal money or assets.

Strategically filing for bankruptcy

We recommend seeking advice prior to entering into business with or investing in a business with a person who has previously been made bankrupt. We recommend this because:

  1. Often the bankrupt has previously been involved in business ventures which have failed;
  2. Becoming bankrupt will generally erase all unsecured debts. For this reason, some people are savvy and use the bankruptcy process to strategically erase debts, rather than repay them.
  3. Becoming bankrupt may show a history or tendency to be irresponsible with finances and investments;
  4. If you are seeking repayment from someone who has been made bankrupt, they will often not have the assets or money to pay you back as their assets were ‘wiped out’ by the previous bankruptcy.

What to do to avoid making someone bankrupt

The key to avoid making someone bankrupt altogether is to get security from them before delivering any services or handing over cash! This means, your terms and conditions or contract should have a clause in it allowing you to have a charge over property and a right to sell that property, where payment is not made. This is particularly valuable where large sums of money are involved or where the relationship will continue over a prolonged period of time.

However, if you are providing services for a smaller amount, you can request the customer to provide trade references. You should call these references to confirm that the customer is a prompt and reliable payer. You can also get trade credit insurance, which can cover the risk of non-payment from your customers.

If you need assistance recovering your debts or dealing with bankruptcy, please contact one of our experienced insolvency team members at Taurus Legal Management on (03) 9481 2000 or info@tauruslawyers.com.au.

 

 

Posted by Taurus Legal Management