Bankruptcy happens all around the world, but interestingly enough, it takes different forms. Below we compare and discuss the bankruptcy processes of Australia, the UK, and the US.
Bankruptcy in Australia
In Australia, bankruptcy falls into two categories: voluntary and involuntary.
Voluntary bankruptcy is when a petitioner files a “debtor’s petition” with the court to declare bankruptcy. But in involuntary bankruptcy, creditors are able to file against debtors who have not remained current on payments. For this to be allowed, the debtor must owe debts totaling $5,000. Involuntary bankruptcy is done through a process order called a “sequestration order.”
In Australia a debtor is considered to be legally bankrupt from the day the bankruptcy is declared, but the bankruptcy remains on the debtor’s credit report for 5 years. During the three years that the debtor is considered bankrupt, there are certain restrictions imposed on the debtor, including travel outside of Australia.
Debt in Australian bankruptcy is defined as “secured” and “unsecured,” just as in the US.
Bankruptcy in the UK
Bankruptcy is a little different in the UK in that it only applies to individuals. That means a corporation cannot go “bankrupt.” Instead, companies that are unable to pay creditors are considered “insolvent,” and can often face compulsory liquidation.
For an individual to be able to petition for bankruptcy in the UK, he or she must owe more than £750 (roughly $1,100 USD).
Just as in the US and Australia, a person filing for bankruptcy in the UK is subject to certain restrictions.
Debts are usually discharged after a 12 month process. At that point all restrictions are lifted.
Bankruptcy in the United States
There are many forms of bankruptcy in the United States. Below you will find a very brief overview.
Chapter 13 bankruptcy is also known as “debt reorganization” or “wage earner’s bankruptcy.” In this form of bankruptcy, you repay all or some of your debt over three to five years, and it protects your home and car from foreclosure and repossession.
Chapter 7 bankruptcy is also known as “fresh start” bankruptcy. In this form of bankruptcy, all assets and property (with some exceptions) are liquidated and become part of the “bankruptcy estate.” The proceeds from the sales are used to repay your debt. If this is your situation, Chapter 7 bankruptcy can be an effective method of discharging most of your debt, giving you the fresh start you need. In addition, you will be able to keep your house, car and retirement savings in most cases.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy, allows large businesses to restructure debt while continuing operations under a plan of reorganization supervised by the bankruptcy court.
Working with a Bankruptcy Attorney
Bankruptcy can be an overwhelming process. That’s why we advise that you work with a phoenix business bankruptcy lawyer that is familiar with various debt repayment options. We are committed to helping our clients understand their rights and options under the bankruptcy law and developing the debt relief solution that makes the most sense for each individual. We invite you to call (602) 648-3274 or contact our Arizona office to schedule a free initial consultation.
668 N. 44th St., Ste 320, Phoenix, AZ 85008