For Individual
Individual is unable to pay all debts.

Personal guarantees provided for company debts are called up.

Individual receives letters of demand, writs and/or bankruptcy notices from creditors, debt collectors or solicitors.

For Creditor
Not receiving payment of debt.

Dishonoured cheques/payments.

Trading terms extended or not met by the individual (debtor).

The debtor disposing or transferring property prior to bankruptcy.

An individual becomes bankrupt either:

• voluntarily (Debtor's Petition); or
• by an Order of the Court on the application by a creditor (Creditor's Petition)

The bankrupt's assets vest in the Trustee in bankruptcy.

Trustee recovers and sells assets of the bankrupt for the benefit of creditors and investigates the bankrupt's affairs.

Some bankrupts must contribute funds out of their income.

Bankrupts imposed with certain restrictions, eg. freedom to travel overseas limited, cannot freely incur debt.

The bankruptcy lasts a minimum of three years unless annulled.

For Individual
Uncertainty is crystallised.

Provides relief from debt problems and extinguishes existing debts.

No further harassment from creditors.

Can start life afresh after bankruptcy, free of debt.

For Creditor
Allows an orderly and equitable distribution amongst all creditors.

May recover debts outstanding.

Uncertainty is crystallised.

The bankrupt's affairs are investigated by an independent expert (Registered Trustee).