Facing bankruptcy can be stressful, especially if you don’t know what to expect. Many Australians dealing with financial difficulties worries about their assets, debts, and future stability.

The good news is that bankruptcy is a structured legal process designed to provide relief, and a Registered Trustee plays an important role in managing this process fairly and efficiently.

A Registered Trustee makes sure that bankruptcy is handled according to Australian bankruptcy laws, protecting the rights of both debtors and creditors. However, many individuals don’t fully understand what a trustee does or what to expect when working with one.

Let’s explore the role of a Registered Trustee, their responsibilities, and how they assist in the handling complexities of bankruptcy while making sure everything is done according to legal requirements.

What is a Registered Trustee

A Registered Trustee is a licensed professional responsible for managing bankruptcy cases in Australia. Their job is to make sure the process follows the Bankruptcy Act 1966 (Cth) and that both debtors and creditors are treated fairly.

There are two types of trustees in bankruptcy:

• Government-Appointed Trustees: These trustees work under the Australian Financial Security Authority (AFSA) and handle cases when no private trustee is chosen.
• Private Registered Trustees: These professionals are licensed by AFSA and provide personalised management of bankruptcy cases, often offering more flexibility and direct support.
  

A Registered Trustee has the legal authority to review financial situations, take control of assets, manage creditor claims, and oversee debt repayments. Their main role is to make sure that the bankruptcy process is managed properly while protecting the rights of everyone involved.

Responsibilities of a Registered Trustee

A Registered Trustee plays an important role for managing the bankruptcy process and making sure it follows that all legal requirements are met.

• Reviewing Financial Situations: The trustee reviews the bankrupt individual’s financial position, including income, assets, and debts, to determine how the bankruptcy should be managed.
• Managing and Distributing Assets: If required, the trustee takes control of eligible assets and distributes them to creditors in accordance with bankruptcy laws.
• Checking Financial History: Trustees examine financial transactions leading up to bankruptcy to identify any irregularities, such as asset transfers that may affect creditor claims.
• Following Bankruptcy Laws: By following the Bankruptcy Act 1966 (Cth), trustees ensure that both debtors and creditors are treated fairly and that the process runs lawfully.

What to Expect During the Bankruptcy Process

Going through bankruptcy can be challenging, but understanding the process can help you prepare for what’s ahead. A Registered Trustee will guide you through the process, making sure that legal requirements are met while helping you navigate financial challenges. Here’s what to expect during the bankruptcy process:

• Initial Consultation: The trustee will review your financial situation, including your debts, income, and assets, to determine if bankruptcy is the right option for you. They will also explain your rights, obligations, and the impact of declaring bankruptcy.
• Declaration of Bankruptcy: Once bankruptcy is officially declared, the trustee takes control of your financial affairs. They notify creditors, stop most legal actions against you, and begin managing your debts under the Bankruptcy Act 1966 (Cth).
• Asset Management: Some assets, such as household essentials and tools for work, may be protected, while others, like real estate or high-value possessions, could be sold to repay creditors. The trustee will assess which assets are included in the bankruptcy process.
• Ongoing Obligations: While bankrupt, you may need to make income contributions if your earnings exceed a set threshold. You must also report any financial changes to the trustee and follow restrictions on credit and business activities.
• Credit Impact: Bankruptcy remains on your credit file for several years, affecting your ability to get loans or credit in the future. The trustee will provide guidance on rebuilding your financial standing after the bankruptcy period ends.

Rights and Responsibilities of a Bankrupt Individual

When you declare bankruptcy, you have certain rights, but you also have responsibilities that you must follow. Understanding these can help you manage the process smoothly and plan for a better financial future.

• Your Responsibilities: Under Australian bankruptcy laws, you must provide accurate financial information, cooperate with your trustee, and follow any restrictions. This may include reporting income changes, making required payments, and informing lenders about your bankruptcy if you apply for credit over a certain amount.
• Your Rights: You have the right to seek legal and financial advice at any stage of bankruptcy. A professional can guide you through the process, help you understand your options, and assist in rebuilding your finances.
• Life After Bankruptcy: Bankruptcy usually lasts for three years and one day. After this period, you are discharged, and most debts are cleared. However, some debts, like court fines and child support, must still be paid. Bankruptcy will stay on your credit report for up to five years, but with careful planning, you can start improving your financial situation.

Choosing the Right Registered Trustee

Choosing the right Registered Trustee is important for a smooth bankruptcy process. When making a decision, look for experience, honesty, and clear communication. A good trustee will explain your rights, keep you updated, and make sures everything follows legal rules.

Trustees should act fairly and professionally, making sure both you and your creditors are treated properly. They should be open about the process and help you understand what to expect.

At Clare Corrigan, we focus on fairness, support, and expert management. With strong experience in Australian bankruptcy laws, we guide you through the process with care, making sure your rights are protected.

Alternatives to Bankruptcy

Bankruptcy is not the only way to manage financial problems. There are other options that may help you settle your debts without the long-term effects of bankruptcy.

• Debt Agreements (Part IX) and Personal Insolvency Agreements (Part X): These are formal agreements that let you repay your debts in a structured way, often with reduced payments based on what you can afford.
• Informal Debt Negotiations: You can talk to your creditors to arrange lower payments, more time to pay, or temporary relief based on your financial situation.
• Financial Hardship Arrangements: Many lenders offer support programs that can help by reducing repayments or waiving interest for a short time.
• Getting Professional Advice: A financial expert or a Registered Trustee like Clare Corrigan can guide you through your options and help you choose the best solution.

Knowing what a Registered Trustee does can make the bankruptcy process easier to understand. They manage the process fairly, protect everyone's rights, and help with financial matters. Before making any big financial decisions, it's important to consider all options and get expert advice.

If you're looking for professional bankruptcy guidance, Clare Corrigan is here to support you. Get in touch today for personalised solutions that fit your needs.