The person is bankrupt, can I pursue payment?

When a person that owes you money becomes bankrupt, your rights to pursue them for payment may change.

Debts covered by bankruptcy

  • credit cards
  • personal loans
  • utilities
  • trade debts.

As a creditor, this means:

  • You are not able to demand payment of the debt from the person.
  • You may be eligible to receive payments from the trustee, if available.
  • Most of these debts are released (or extinguished[?]) after the bankruptcy ends.
  • You will need to contact the trustee of the bankruptcy for any updates or further information.

Debts not covered by bankruptcy

  • fines & penalties
  • HECS & HELP debts
  • debts incurred after the bankruptcy started.

As a creditor, this means:

  • You may still be able to demand payment of the debt from the person.
  • You are not eligible to receive payments from the trustee of the bankruptcy.
  • The debt is not released (or extinguished[?]) after the bankruptcy ends.

For more information on unsecured debts and whether they are provable[?] and/or extinguished[?], please see: Creditor's quick guide - bankruptcy and unsecured debts

Secured debts

A secured debt is a debt tied to a particular asset e.g. car or home loan.

Bankruptcy does not change your rights as a secured creditor.

  • You are still able to pursue the person for payment of the debt.
  • You may repossess and sell the secured goods if the person is unable to maintain repayments.
  • If you sell the asset and it doesn’t cover the debt, the ‘shortfall’ becomes an unsecured debt covered in bankruptcy.

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