What happens? The answer is easy. From your perspective, once you have sent us your completed and signed forms you get up the next day and go to work. It is just another day.
At our end, while you go about your normal daily routine, we lodge your forms with the Australian Financial Security Authority (AFSA), the government agency responsible for the administration and regulation of the personal insolvency system. AFSA starts processing them and once they are accepted they are given a number, and you then have the protection of bankruptcy.
AFSA emails Nicholls & Co to advise of your bankruptcy and we give you a call to let you know it has gone through. Once you hear from us, you continue your life – except with the relief that you no longer owe the debt that has been caught by your bankruptcy, and the knowledge the debt collection calls will come to a halt.
That is the short answer, but what happens behind the scenes is summarised below in more detail, to give you a better idea of the process.
To apply for bankruptcy, you must lodge a properly completed Debtor’s Petition (application for bankruptcy) and Statement of Affairs (details of your financial situation) with AFSA. You should know that your Statement of Affairs will contain some information that remains confidential and some that does not. Answers to questions one to 18 are confidential; answers to questions 19 and on are not.
It takes up to five business days for AFSA to approve your forms, depending on how busy they are, but it could also happen in less time.
When AFSA accepts your forms, they are given a number. This is called a bankruptcy number and you then have the protection of bankruptcy. It does not matter what time of the day this happens – all bankruptcies are deemed to have taken effect at the start of that day.
AFSA then emails Nicholls & Co with a ‘Certificate of Appointment’. This document details your name, bankruptcy number and date of bankruptcy, and appoints Alan Nicholls as the Registered Trustee to administer your bankruptcy. Upon receiving this, we let you know the process is now underway.
AFSA also issues an ‘Initial Letter to Creditors’, notifying your creditors about the bankruptcy and advising them to stop any debt recovery action they may have started against you. This ‘Initial Letter to Creditors’ provides creditors with a schedule of your creditors and the amount owing to each one. It also details your name, bankruptcy number, date of birth, current address and previous addresses, occupation, associated entities, date of bankruptcy, projected date of discharge and contact details for Nicholls & Co.
Nicholls & Co sends you a letter attaching a copy of the ‘Certificate of Appointment’ for your records and also issues an ‘Initial Advice to Creditors’ to establish communication with your creditors.
This advises them to contact us for any issues regarding money they are owed, and to further advise them to stop collection action to avoid unnecessary expense. We also send you a copy of this so you know everyone is on the same page.
Nicholls & Co then starts the process of administering your ‘bankrupt estate’. This involves letters going to the stakeholders detailed in your Statement of Affairs so we can gather more information about your financial affairs.
Within the first few months of your bankruptcy, we issue a further ‘Report to Creditors’. It gives them an update on the progress being made with administering your bankruptcy and also lets them know if they are likely to receive some payment or should write off the debt. Again, for transparency and to keep everyone on the same page, we will send you a copy of this.
It will be necessary for Nicholls & Co to stay in touch with you during the first few months of you becoming bankrupt as we get things going. From there, the amount of contact will markedly decrease and may even be just once a year, on each anniversary of your bankruptcy.