Insolvency refers to the inability to pay debts as and when they fall due. Bankruptcy is the process of administering the estate of an insolvent person.
Bankruptcy provides a mechanism for the following objectives to be met:
- Provide relief to the Debtor (i.e. Bankrupt) by enabling them to be released from the burden of their liabilities and an opportunity for a fresh start (after due process);
- Provide equitable distribution of essentially all the Bankrupt's assets to all Creditors;
- Enable an investigation of the Bankrupt's affairs and the circumstances leading up to their insolvency.
For further information regarding Bankruptcy please see the booklet
available for your review or visit the Australian Financial Security Authority (AFSA) web page, click here