The short answer is yes, you can.

You may be thinking “how could someone be bankrupt twice at the same time?”. Well the answer is a fairly simple one. For instance, say someone trades a business as a sole trader, incurs a number of debts which they cannot pay and is eventually made bankrupt by one of those creditors. There is nothing prohibiting that bankrupt from continuing to carry on that business whilst bankrupt and so that bankrupt continues to trade during their bankruptcy and once again the business does not do so well, loses money and incurs debts which the bankrupt cannot pay. At this stage the bankrupt may voluntarily file for bankruptcy or can be made bankrupt by one of their creditors (whose debt has been incurred AFTER the start of their first bankruptcy).

The reason why this can happen is because Section 82 of the Bankruptcy Act provides that provable debts in a bankrupt estate only includes those “to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy”. Therefore, where a debt is incurred AFTER the date of bankruptcy this debt is not captured in the first bankruptcy and the bankrupt will need to pay it or potentially face bankruptcy again.

The interaction between the first and second bankruptcies is covered by Section 59 of the Bankruptcy Act which essentially provides that all divisible property of the bankrupt acquired before or after the date of their first bankruptcy immediately vests in the second trustee. This section also provides for the first trustee to lodge a claim in the second bankrupt estate for their unpaid time costs and expenses and all creditor claims proved in the first bankrupt estate. They are then entitled to prove for this combined amount in the second bankruptcy and receive any dividends which may be distributed.  In respect of an income contribution liability raised by the first trustee prior to the second bankruptcy, this liability becomes a debt provable in the second bankruptcy (therefore removing the need for a bankrupt to pay it).

If you are facing a second bankruptcy and want further information or assistance get in touch on 1300 906 966 or chat to us via the live chat window on our site.

Posted on 14-03-18 in Bankruptcy Assistance, Personal Debts.